The Workers’ Compensation Insurance Rating Bureau on Wednesday formally recommended that the California Department of Insurance increase the advisory pure premium rate by an average of 2.6% for policies incepting on or after Jan. 1.

If approved, it would be the first rate increase since November 2014, when the state adopted a rate of $2.74 per $100 of payroll. Since then, savings from the reforms in Senate Bill 863 and subsequent fraud-fighting efforts drove a series of annual and midyear rate filings that lowered the advisory rate by more than 44% to $1.52 for policies incepting in 2020.

Rates likely would have continued to fall but for the COVID-19 pandemic.

“Absent the impact of COVID-19 claims on 2021 policies, the filing reflects a modest decrease (1.3%) in advisory pure premium rates,” the WCIRB said in a statement. “In addition to projecting the cost of COVID-19 claims to be incurred on 2021 policies, the filing also reflects the impact of the pandemic-related economic slowdown on future wage growth, claim frequency and claim severity.”

Materials presented to the WCIRB’s Governing Committee during an Aug. 12 meeting show the indicated rate would have been $1.50 per $100 of payroll if projections for COVID-19 were excluded.

Although the indicated rate is higher than the last approved rate, it would still be 13.3% lower than the industry average charged rate of $1.80 per $100 of payroll as of July 1.