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California Employers – 27% Premium Increase Recommended

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California Employers May Face Large Premium Increase

The California Employers Premium rate increase recommended by the WCIRB tallied at  27%. In my last post, I blogged my thoughts on how the California Workers Comp rates would increase in the coming years.  I had thought there would be an increase of a few percentage points per year.

Graphic of Bar Graph Rating California Employers Increase And Dollar Sign On Laptop
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The California Workers Compensation Insurance Rating Bureau (WCIRB) just released a recommendation for a 27% increase to the current base Workers Comp insurance rates for employers in California.  This is for all policies after 7/1/09 and forward. That came as a shock to me.

I read further into their analysis.  The WCIRB press release said that 7% was due to recent court decisions and rulings.  That made sense to me as the hard stance taken by Senate Bill 899 was likely to be softened.  The other 20% is astounding to me.

I decided to examine their 06/30/08 and 09/30/08 Workers Comp Insurance Experience reports.  These do show some increases in the Ultimate Losses in the medical area.  I am trying to comprehend where the 20% came into play and I just do not see it.  Forecasting rates can be a very difficult task.  However, a recommendation of 27% seems excessive to me.  I may not have available to me all of the statistics the WCIRB have in their possession.

Female Doctor Reading Medical Report California Employers Over Light Blue Background
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Insurance Commissioner Steve Poizner has to approve any increases or decreases to the base rates for Workers Comp premiums.  He has taken a more conservative tact to the increases or decreases the WCIRB has recommended.

I think one thing that can be taken away from this recommendation for a large increase is that there are upward pressures on Workers Comp reserves due to the current environment in California.  The medical treatment is becoming more expensive in most states.  The Medical Provider Networks (MPN’s) were put into place to control medical treatment.  I am wondering if the MPN’s were ignored in their recommended increase.

Between now and July 1, 2009, the Insurance Commissioner will adopt a rate change.  This will be the final numbers for 2009.  One thing to remember is the insurance carriers can all deviate from the recommended rates as they see fit as long as the Department of Insurance approves the deviations. The deviations are usually increases to the recommended rates.                              

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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