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.
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.
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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