California, known for having some of the highest workers’ comp costs in the country to date, has posted significant cost decreases in recent years thanks to timely reforms and regulations.
A report published April 12 by the Workers’ Compensation Insurance Rating Bureau (WCIRB) revealed that employers’ average insurance premiums in California have significantly dropped from $6 per $100 in 2003 to $2.86 in 2015.
At around the same time of the report’s publishing, the WCIRB submitted a recommendation to Insurance Commissioner Dave Jones for a “pure premium rate” averaging $2.30 per $100 of payroll, to be made effective July 1. This proposed change is 10.4% lower than the average pure premium rate charged by insurers as of Jan. 1.
The recommendations are ultimately advisory, and insurers are still free to charge whatever price they deem fit for the market. The proposal, however, highly suggests that the state’s workers’ compensation costs are going to fall even further in the years to come.
California’s long journey towards lower workers’ comp insurance premiums began more than ten years ago, according to an article on The Sacramento Bee, when employers and then-Gov. Arnold Schwarzenegger demanded Legislature for changes to reduce costs in 2004. Lawmakers once again sprang into action in 2012 to increase cash benefits while offsetting medical cost reductions.
While both actions have undoubtedly moderated employers’ costs, 2009’s record for average insurance premiums at $2.10 per $100 remains the state’s baseline for performance. Despite this, 2009’s record was considered the nation’s highest according to a biennial survey by the Oregon Department of Consumer and Business Services.
Notably, a 2014 survey by the Oregon Department of Consumer and Business Services revealed that California’s costs were almost double the national median for that year.
While the state is clearly working its hardest to reduce its workers’ comp costs, there is still much more room for improvement.
