Brace for Impact (a July Workers Comp premium increase).

The statement above, made by the heroic pilot of US Airways Flight 1549 last January is an apt description of what employers must prepare for. The impact is higher Workers Compensation premiums.

It’s being reported that the Workers Compensation insurance rating bureau, (www.wcirbonline.org), actuarial committee may recommend a 27% pure premium increase to its governing committee. This incease may be in July 2009.

This means that the claims and related information being analyzed by the WCIRB show that the premiums the insurance companies are charging are too low for the claims they are paying.
Workers Compensation Executive, an award winning publication which reports on the California workers compensation industry, (http://www.wcexec.com/articles/WCE01-20090317-001.html), reports on this meeting.

Pre-reform & Post-reform average premium rates

During the past several years, the Bureau has been able to make once a year premium recommendations. Those recommendations have been to lower premiums. Premiums were lowered as a result of the substantial reforms the California legislature adopted, (SB899, SB228, and AB227) under the direction of CA Gov. Schwarzenegger. These reforms brought about much needed sanity for the California Workers Compensation coverage system. The reforms allowed the insurance companies to lower premiums across the board. They also allowed employers to get some relief from the astronomical premium increases they were experiencing earlier this decade.

At the same time, all the key parties which administer the California Workers Comp system have been waiting for claims payment data to see how the reforms have affected the Workers Compensation marketplace. Meaning, how have the policy reforms worked in practice for the injured employees, and how have they affected the claims paying ability of the insurance companies. Now that data is pouring in. The article mentions that court decisions have also had an effect on the dollar amounts being paid to injured employees.  

To sum up, brace for impact now, in hopes that you can survive, if or when, you take a rate hit.
Work with your broker to make sure you have no open claims. If they don’t understand your urgency, help them, (or fire them).

This is going to be important for employers looking to keep their Workers Comp costs lower.
Your Agent/Broker CAN perform ex-mod maintenance. If they don’t know what that is, contact me, and look through prior posts to get informed about ex-mod improvement.

There are steps to be taken to guard your mod, if you like what you have now.
You can also improve it, if you have a higher ex-mod.

Please comment to let others know what you’re experiencing as it relates to your insurance company or your rates.

Cheers, your Work Comp wonk.