Last July the Bureau filed for a 23.7 pure premium increase, but the Commissioner of Insurance declined the Bureau’s advice and approved a zero premium increase. Various California carriers have raised rates, although, (generally), not to the extent the Bureau had advised.

Now, with the Bureau coming out again for a substantial advised adjustment, and with a Gubernatorial race coming next year, it could be that the Commissioner will again advise against any pure premium change.

The problem for California employers is that insurance carriers may be able to keep their rates mostly stable for the next 12-18 months, but at some point they’ll likely have to raise rates dramatically. After all, the Bureau is looking at all the claims data for all employers and policies in California, and their data tells them that carriers are sitting on ticking time bombs and the fuses are getting shorter by the minute.

So if you’re reading this, please call or write your broker and inquire about ideas and methods to reduce your Experience Modification. If your ex-mod is higher than 1.00, (which is just average – like a C in school), it’s possible you can make some moves and get your mod down. Do it, so you’ll be braced for impact. Cheers.

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.

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.

The post by Jan Norman of the OC Register relays the specific breakdown of the premium increase, and she is recalling the horror story of rates prior to the reforms of the Schwarzenegger administration. Those employers in business at least ten years know this story well. And while thankful for the reforms, (mostly SB899 – click for summary), we know there are other forces less concerned about the effect of Workers Comp rates on California businesses.

Orange County employers: take her cue and enlist your broker to perform his/her best review of your experience modification factors and your current discount package to see if improvement can be made before higher rates hit your next renewal.

Another organization is alerting its participants to the changes on the horizon, see: http://www.fixworkerscompnow.org/

This blog is for the purpose of addressing best experience mod management practices, so check back as I peel away the curtain and reveal how your business can position itself to achieve a better bottom line for your workers compensation plan.

Cheers, your work comp wonk.