California Rate Increases Not Due
California’s Workers Comp conundrum was not due to the current medical price increases. The California rate increases were due to not incrementally increasing the rates as medical and other expenses had risen over time. The pundits on California’s Workers Compensation current environment have indicated a rate increase from 10% to 45%.
The bell is now tolling for employers in CA as the prior Insurance Commissioners and Governors would not increase the recommended rates for years even though the WCIRB (California’s Workers Comp Rating Bureau) had recommended huge increases for over five years.
I had written about the WCIRB’s recommendations being rejected by the Insurance Commissioner several times. Feel free to use the search box on the right side of the screen and search California or Insurance Commissioner. The following is a list of the articles on CA’s inaction and the change in the environment:
- California Workers Comp Costs Growing Quickly – Workers Comp medical cost warning
- California And The 0% Rate Increase – the WCIRB had recommended a 27.7% rate increase
- Is A 5% Increase Enough for California’s Workers Comp System? – the WCIRB had recommended a 16% rate increase. This article was written in 2008.
California is the only state that I can recall where the Insurance Commissioner or Governor totally turned away a rate increase recommendation by their rating bureau. In fact, one of the responses from the Commissioner was a 27 point recommendation on how to reduce Workers Comp costs. I, as many in the Workers Comp community, was not surprised with the new and upcoming increases in rates.
In any state, the Insurance Commissioner should take heed of their rating bureau’s recommendations. The NCCI, WCIRB, and other Workers Comp rating bureaus are not just pulling numbers out of a hat. They have direct access to the statistics. The rating bureaus may not be perfect, but they are very accurate in most cases over a period of time.
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