California Workers’ Comp Rates Increase January 2021

California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) has submitted an advisory on their pure premium rates to the State Insurance Commissioner that indicates a rate increase for the year. The new proposal of the WCIRB averages out to a growth of $1.56 in premiums per $100.00 of salary – a 2.6% climb that came after a previous decision to lower rates was reversed. These new rates were put into effect on the 1st of January, 2021, noted as the first time in many years that business owners in California will have to deal with an increase in workers’ comp rates.

Dave Bellusci, Executive Vice President and Chief Actuary of the WCIRB, indicated that the plan to lower rates for 2021 would have been successful had it not been for Covid-19 crashing onto the scene. He stated that if it were not for the need to include coronavirus claims into their projections for the year, workers’ comp rates would have reflected a drop of 1.3%. In addition to the elevated premiums, there will also be a Covid-19 surcharge that will be applied to all employers based on the amount of exposure their respective workforces have to the virus. This means that industries such as healthcare, social services, and other lines of service that require front line representation will be charged higher than businesses that are less vulnerable to the disease.

Although these actions tally up into the largest spike in workers’ compensation premium rates in a very long time, it must be noted that the emergence of Covid-19 and the ensuing pandemic that came with it are the main reasons behind it. In other words, the rate increase was the result of an extraordinary year that was spent reeling because of a virus that was able to lock portions of the world down and continues to make it impossible to live life the way we did before the pandemic. Now that 2021 is here, all employers can do is make the necessary adjustments and lie in wait, together with the rest of the world, for the day we can all breathe free again.

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