California Insurance Commissioner Lara Says No To COVID X-Mods

One headline that jumped off the page recently over a slow workers comp start to July 2022 was that California Insurance Commissioner Lara said No to adding in any COVID-19 data to the X-Mods.   Let us look at what was said and how that will affect California X-Mods over the next few years.

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California’s WCIRB (Workers Comp Insurance Rating Bureau) had made a recommendation that some (not all) of the COVID-19 data become part of future X-Mods.  California Insurance Commissioner said “No” to the proposal and rejected WCIRB’s recommendation.

You can read the WCIRB request to add in the COVID-19 data and the rejection here.

FILE NUMBER REG-2022-00006

DECISION AND ORDER From California Insurance Commissioner Lara

I hereby adopt the Proposed Decision and Proposed Order of Yvonne Hauscarriague, dated June 1, 2022, in the above-entitled matter as my Decision, except for the proposed amendment to begin including COVID-19 claims, with
accident dates on or after September 1, 2022, in the experience modification computations.

After weighing and considering the evidence and arguments, I conclude it is unreasonable to make such a change at this time; I, therefore, decline to adopt the rule that would limit the exclusion of COVID-19 claims from experience rating to those claims with dates of injury between December 1, 2019, through August 31, 2022.

WHEREFORE, IT IS ORDERED that, except for the proposed amendment to limit the exclusion of COVID-19 claims from experience rating that I decline to adopt in this Decision and Order, the WCIRB amend the California Workers’
Compensation Uniform Statistical Reporting Plan‒1995, Miscellaneous Regulations for the Recording and Reporting of Data–1995, and the California Workers’ Compensation Experience Rating Plan‒1995 as set forth in the
Proposed Decision.

IT IS SO ORDERED THIS 28TH DAY OF JUNE, 2022

Let us look at why this was done and if it makes a difference to employers’ X-Mods.

Implications Of The Decision

Many workers comp pundits and experts jumped into the fray over whether including or excluding the COVID-19 data would have any effect on Workers’ Compensation Mods and premiums.   The question is – Did California Insurance Commissioner Lara help or hurt the CA Workers Comp system?

My previous opinion was that it should stay out due to the two main drivers of workers’ comp X-Mod increases or decreases:

• Claims
• Payroll

A previous article I had written agreed with the Commissioner’s decision.  Then I read a few other pundits/experts’ opinions and they had mixed conclusions.   Some were saying the added claims and payroll would balance each other out over time.  Others, such as myself, pointed to the large number of claims that may be included while the payroll was limited due to classification code changes. 

I think we will have to wait 10 years to look back on whether or not including or excluding COVID-19 data was the right decision such as California Insurance Commissioner Lara’s decision.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

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