CA Ins Code Section 11822

The rates fixed by the board of directors shall be that percentage of the payroll of any employer which, in the long run and on the average, will produce a sufficient sum, when invested in a way as to realize the maximum return consistent with safe and prudent management practices:

(a)

To carry all claims to maturity. The rates shall be based upon the “reserve” and not upon the “assessment” plan.

(b)

To meet the reasonable expenses of conducting the business of the fund.

(c)

To produce a reasonable surplus to cover the catastrophe hazard.