This was a very informative two-hour seminar put on by Dave Bellusci, Senior VP and Chief Actuary of the Bureau, and one of his Senior Research Analysts.

I already knew the basics about the changes: Employers with Experience Modifications over 100 are likely to receive higher mods, and those under 100 will get lower mods.

But during the seminar I learned the following:

Ø      how the new benchmarks will work,

Ø      how the new Credibility values, (B and W values) will apply,

Ø      That the Expected loss values will reflect results from 20 Industry groups the bureau identified,

Ø      How the Rating forms themselves will undergo some helpful features, (including a loss-free rating number on Rating forms), starting in 2011.

All in all, it was very informative, and there was a lot more information.
If anyone reading this emails a question to me, I’ll be happy to research it to provide the best available answer. Here is a link to the WCIRB spotlight note about the changes: https://wcirbonline.org/wcirb/spotlight/spotlight_2009_11.html

In the meantime, Employers, do your best to “brace for impact”.
Focus on your fundamentals of claims management, injury prevention, and loss-control. These activities will serve you well because in the future it’s likely that your premium will increase.

Thank you,
Mike Vrchota

A lonely Nevada road

Sure, the ads can be humorous in their own way, but the issue is serious for business owners who want to stay in business, be profitable, and continue to employ folks in their local community, (which is the desire of most employers).

One step owners can do is take action and consult with an Insurance Broker to dig into their Work Comp plan to look for mistakes or overcharges. In some cases, significant funds have been recovered and positive changes have been made by qualified Brokers.

Recovering funds from previous errors, and making sure your Experience Modification and class codes are exactly where and what they should be may give some business owners the glimmer of light to see their way through challenging times, (like now). The methods and results being referenced can be seen at the Institute of Work Comp professionals, (IWCP), website: www.workcompprofessionals.com

Client Care Insurance is a Certified Work Comp Advisor agency helping California Employers, Human resource managers, (and those who help them), to quit losing money and develop powerful employee relationships for bottom-line improvement. Find a broker with a plan to put money back in your pocket.

Don’t move, improve.

Cheers, your Work Comp Wonk.

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.

For those of you employing Manufacturing staff, (and purchasing Workers Comp coverage in California),
this is probably not a surprise to you.  

The article is helpful because it encourages Manufacturers to evaluate their Work Comp coverage and insurance carrier support. It also encourages employers to review employee safety options and education.

There’s a saying for those of us who help employers improve their Workers’ Compensation plans; the happier your employees, the lower your rates. Basically, after all is said and done, do everything you can to keep your staff safe, value them, and you’re likely to find that the happier they are, the less likely they are to burden you with careless or persistent claims.

I welcome input and comments from Manufacturers and other employers located here in California who don’t have the opportunity to pull up stakes and move to Arizona. Best wishes to all readers for Happy Holidays!!

Mike Vrchota
Commercial Insurance Specialist

Your Work Comp wonk is writing to advise you about new rates for State Compensation Insurance Fund policyholders effective 01/01/2009. Their premiums are increasing on average 8.9%

This will mean that some of you will pay more than that, some of you less.

There’s been a difference of opinion between three organizations which have various responsibilities as it relates to setting Workers Compensation premium rates here in California.

The WCIRB, (Workers Compensation Insurance Rating bureau), has recommended a 16.0% increase in premium rates, this is their recommendation to all Workers Compensation insurance companies here in California. They base their recommendations on the Claims payment data they are seeing from the insurance companies.

The Insurance Commissioner looked at the data and indicated that he felt premiums should only go up 5%.

Read his press release. The LA times writes about it in this article.

Well, the largest carrier in California, the State Compensation Insurance Fund, weighs in with their premium increase, read their premium increase news flash.

The way you may interpret this is that the WCIRB takes the most calculating look at the data, and comes out with what they believe to be the accurate reflection of where premiums need to go. The Insurance Commissioner is a politician, and one who is going to run for governor. Therefore, he would like to stay the friend of business, to the greatest extent possible, and publicize that things are not that bad, so he recommends a lower premium increase. And ultimately, the State Compensation Insurance Fund looks at everything and doesn’t want to lose policyholders because of higher rates. So they come in about mid-way.

If you are a Workers Compensation policyholder in California, you can expect higher premiums on your next renewal. This is big news, because premiums had been coming down from 2003 to 2007. Now, that trend may start heading the other way. But there are usually things you can do, with the help of your competent broker, to improve your bottom-line. If you lack an experienced broker, I gently suggest it may be time to contact one for a policy review. Perhaps even me. This is especially true for Experience-modified policyholders. You have greater opportunities, and potential pitfalls, than those who are not experience-rated.

Wishing there was better news.

(by your overworked claims adjuster).

The dollar amount your insurance company has reserved for your claim counts as a loss against your policy, and is reported to the Workers Compensation Insurance Rating Bureau, (WCIRB). It then appears on your Unit Statistical report. This will happen year after year until the claim is closed, but thankfully, it only counts against your experience modification for the first three years.

This is all fairly reasonable, and in fact, the insurance companies are required to treat your open claims as paid claims. However, at least two issues here have substantial impact on your Unit Stat report, which means they have direct effect on your premium.

The issues are:

 
1)      The dollar amount your Claims adjuster has reserved for the claim is larger than necessary, and
2)      The Claims adjuster has kept your claim open, even after your employee is back to work!!

The reasons these things happen:

 
1)      When claims initially happen, the claims adjuster has no idea how substantial the injuries to your employee are. So she sets a claims reserve on the high side, BUT NEVER BACKS IT DOWN!! Example: The employee’s cut, which gets ten stitches, is treated as a $50,000. claim. Does this make sense?

2)      In many cases, the adjuster doesn’t keep up with the employee, or with you, to know when the employee is back at work. And even worse, in some cases, the claims adjuster has every paperwork item he needs to close the claim, but the information just sits on his desk. Does that make sense?

As they say, “the squeaky wheel gets the grease”. Be the squeaky wheel. How, you say?

Well, either you have to do it, (yea – like you have time for that), or your Broker/Agent does it.

That’s right; this is regular maintenance for your program. And it pays off.
You can positively affect your experience-modification if you do this.

One of the best things I hear from an adjuster is when she says: “Oh, I can close this claim”.

And I say, great, could you do so, TODAY!! Thank you, my client will be delighted.

Workers Compensation Insurance Rating Bureau

Try to think of the number one item which affects your Workers Compensation coverage premium.

Is it the Insurance Company you’re with? No.

Is it your agent/broker? Maybe – if he or she is knowledgeable about the subject being discussed here.

Is it the California Work Comp industry in general? No.

Is it the industry you’re in? No.

Is it the claims history you have? Could be, but if your claims history is difficult, there are still things which can, and should be done to improve your premium.

For experienced-modified policyholders in California, (generally those paying over $12,000 to $15,000 in premium each year), the number one item which affects your modification, and thus your premium, is your Unit Statistical report. What’s that?

This report is produced by your (current or prior) insurance carrier 18 months after your policy first starts. The insurance carrier is reporting to the WCIRB, (Workers Compensation Insurance Rating Bureau), specific information about your claims, (open claims, closed claims, paid claim amounts and amounts in reserve). Every carrier is required to do this, and to do it 18 months after your policy starts. The carriers must report again after the 30^th month, and again twelve months after that. Even though a long-standing claim can go on for many years, your experience modification is effected only for the initial three years of claims activity for each claim.

In cases where you have been with a carrier that went insolvent, it can be quite difficult to obtain an accurate report. This is truly a situation where choosing a capable carrier has long-term effects for your business.

In any case, as the business owner or other responsible person in your organization, consider the

Unit Stat report like a final exam. This is the key date for your work comp plan. If your agent/broker is not focused on this date and the claims information shown on this report, then you have the wrong representative.

You might ask, why should I care? Others are nodding their heads, I know, I know.
They know how vital it is to take action before the report is filed,
(once filed, no adjustments are allowed).

The next post: the what, why and when of the Unit Stat report.
And what your broker can do, (for you), to improve the report.

Cheers, your work comp wonk.

The WCIRB, the rating bureau for Workers Compensation in California, announced yesterday that they have filed a 16% pure premium increase to be effective 01/01/2009. Many carriers will consider filing for a rate increase to match this recommendation.

Because our California Workers Compensation marketplace is so vast, (long ago) the CA Dept. of Insurance deemed it necessary to create a rating bureau to gather all appropriate information about the Work Comp system. This includes all the data from carriers about their claims activities and payments. Nationally, other states subscribe to the NCCI. But here in CA, we have our own bureau. They work quite similarly.

This premium filing is big news because it signals that the Titanic is making a sharp u-turn. Businesses will be surprised to see premium increases when all they’ve seen the past few years are decreases.

Since Gov. Schwarzenegger and the legislature hammered out some much needed reforms, the Bureau had been recommending reduced premiums. This is the first time in over four years that an increase has been filed. The effect for Business owners would be like skiing into a tree.

That’s the background. What this means is that business must re-visit the fundamentals of their program. Some never left the fundamentals, and their experience mods reflect that stewardship.
Others relaxed a bit and enjoyed the reduced premiums even as their underlying claims activity deteriorated.

Consider this premium filing the warning shot. Contact your broker and initiate activities to make certain that diligence is paid to ex-mod maintenance and improvement now. The California Workers Compensation coverage system is a huge ship, and once it changes course, it is difficult to alter its path. This new premium filing shows that the course has changed.

Cheers, your work comp wonk.