Claim Costs Effect on WC Insurance Rates – Great Graph

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Claim Costs Effect on Rates Direct and Delayed

The claim costs effect has a direct but delayed relationship on insurance rates.

California’s Workers Comp Action Network (WCAN) has produced a few great infographics over the last few weeks.  The infographic shows how claim costs affect insurance rates.   As posted in previous articles, Workers Comp is a delayed system where current costs affect future rates.

Graphic of California Map Claim Costs Effect States of America
StockUnlimited

One can see on the graph that even though claim costs were increasing, the corresponding rates actually dropped in 2008 and 2009.  In 2011, the claim costs leveled off at almost $75,000 per claim.  However, the rates kept increasing afterward.

This is not a California WC system anomaly.  Rating bureaus will often increase the rates in subsequent years to an increase in claim costs.  The increases are often not immediate.  The rates may not be increased across-the-board, but instead, focus in on certain classification codes.

Rates in California are among the nation’s highest.  Hopefully, Senate Bill 863 will reduce costs.  That has not necessarily been the case since its inception.  SB 899 from ten years ago did reduce costs over time possibly due to the inception of MPN (Medical Provider Networks).

Medical provider networks remain a low-cost way to reduce Workers’ Comp costs and provide injured employees with the best of care. 

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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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