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.
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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