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California’s Complex Workers Comp Situation Deepens With Rate Increase

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California’s Complex Workers Comp Situation Deepens

California’s complex Workers Comp situation deepens with a recommendation by  the WCIRB.I had posted a few week ago regarding the 24%+ rate increase that was recommended by California’s WCIRB (Workers Compensation Insurance Rating Bureau). There has been a large amount of discussion in the press about the upcoming increase.

California Map Complex Workers Comp With California Quail
123RF

I noticed in a few articles where even a small decrease was recommended and there were extremely diverse estimations of what increase was needed. The danger of underestimating the rate increase is that a snowball effect will occur when the rates are underestimated over a long period of time. California could be creating an off-the-books crisis. If two workers compensation rate increases fall short of say 20% for two years, then there will a need for a 40%+ increase sooner or later.

The danger of overestimating the basic rate increase is overburdening employers with an unneeded increase further stymieing a recovery from a very rough economy. The insurance market would likely head back to the 1990’s and early 2000’s with the State Fund (SCIF) having almost all of the insurance market A competitive workers compensation insurance market is always better than a virtual insurance monopoly by the State Fund.

The WCIRB and the Insurance Commissioner must perform a very tough balancing act to keep the market healthy. My advice is to take the brunt of the 24% increase and very carefully monitor the market for the next round of rate recommendations.

Picture Of Building Complex Workers Comp Insurance Funds
Wikimedia Commons – BrokenSphere

Why do I keep bringing up California in this blog? The events happening in California will be coming to a rating bureau near you. California’s Workers Compensation system can be a test case for the rest of the country. West Virginia is also a test case for a workers comp system coming out of a State Fund to an open market.

Do you see the similarity? California and West Virginia are both systems that have just gone from monopolistic states to an open market. How they survive may be the future for other states. The best way to know the future of the workers comp market in your state(s) is to observe what is happening in similar states.

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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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