California employers pay the nation’s highest workers’ compensation insurance premiums but rates could decline a bit under a recommendation from the California Workers’ Compensation Insurance Rating Bureau.
The WCIRB, in a filing with the Department of Insurance on Monday, recommended a rate of $2.46 per $100 of payroll, down 5 percent from a current insurance industry average of $2.59 per $100 of payroll, and a 10.2 percent drop from the current advisory rate of $2.74.
The recommendation is purely advisory, as insurers that write policies to cover job-related illnesses and injuries are free to charge whatever they want, based on competition as well as underlying costs.
The proposed “pure premium advisory rate” submitted by the WCIRB is based on the organization’s calculations of costs of providing support payments and medical care to disabled workers, as well as costs of administering benefits. Rates actually charged by insurers vary widely, depending on the hazards faced by employees, profit margins and other factors.
The Oregon Department of Consumer and Business Services conducts the most widely cited surveys of employers’ workers’ comp costs throughout the nation and its 2014 rankings place California’s costs as the highest, at an average of $3.48 per $100 of payroll, with North Dakota the lowest at 88 cents.
California’s high workers’ comp costs have been a perennial political issue in the Capitol. Governors and legislators usually make major changes in benefits, medical costs and eligibility about once a decade.
The last major change in the multibillion-dollar system occurred in 2012 when Gov. Jerry Brown negotiated a compromise among several major stakeholders to raise cash benefits but reduce the costs of medical care. Ever since, opponents of the changes have pressed the Legislature to revisit the issue, but it’s likely that nothing major will be done until late in this decade at the earliest.