California WCIRB Rating Formula Major Changes

July 2, 2015 By JL Risk Management Consultants

California WCIRB Rating Formula

The California WCIRB rating formula changes for January 2017 stood out in one of their recent press releases. The WCIRB (Workers Compensation Insurance Rating Bureau) is the rating organization for WC similar to NCCI.

Before I start to analyze the press release, the WCIRB personnel (for the most part) have been nothing but kind and helpful to me. Their educational conferences are always very informative.

The eye-catching phrase in the recent WCIRB press release alluded to the primary loss figure being changed to match the size of the employer. The primary loss figure for California is now set at $7,000.

Small companies took it on the chin in California two years ago with the elimination of the small employer adjustment. Will small employers take it on the chin again in 2017?

The WCIRB is not alone in making major changes to the rating formula. A series of articles earlier in this blog covered the major changes made by NCCI to their rating formulas in 2013.

Hand Holding Calculator California WCIRB Rating Formula Icon

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According to the WCIRB press release there are two areas that will be the most affected by the changes:

Allow the WCIRB to issue debit modifications, in specified circumstances, excluding the unaudited payroll for policyholders who are uncooperative at the time of a final audit. One has to ask as to what is uncooperative and who determines when a company is so called “being uncooperative. Also, what would be the level of unaudited payroll if there are no payroll figures on which to base this figure?”
The second replaces the fixed $7,000 primary and excess loss split point with a variable split point that varies based on the size of the employer. A variable split point enhances the accuracy of the experience rating formula, especially for smaller employers; reduces volatility and provides flexibility for simplifying the experience rating formula in future years. One cannot help but notice the mention of small employers in this second point.

As we all know the per-unit cost of risk under the rating formulas is much higher for smaller companies than larger ones. I hope the new variable split point changes will not be in the same vein.

I will update this post or add additional posts as the new rules for the California WCIRB rating formula changes are published.

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South Carolina PRIMA Conference – Interesting Presentations

March 11, 2013 By JL Risk Management Consultants

South Carolina PRIMA Conference Had Great Presentations

The South Carolina 2013 PRIMA Conference kicked into full gear today with very good presentations.

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The following is a short program of the all the presenters. I was not sure if I was going to get much out of the conference.

Each presentation has been very educational.

If you are in a Risk Management position in South Carolina, it is worth the time and expense. I will cover each presentation more in a future post. I wish I could have made it to all the sessions.

The presentation on civility in the workplace was very good pure Risk Management.

SC PRIMA

Welcome to Oz

Toto We’re Not in Kansas Any More

March 10-12, 2013

Columbia Marriott

Monday, March 11, 2013

7:30 a.m.

Registration Open

7:30 a.m. – 8:30 a.m.

Breakfast in Exhibit Area

8:30 a.m. – 8:45 a.m.

Welcome

8:45 a.m. – 9:45 a.m.

Keynote Address

Is It Me or Is It You?

Creating a Culture of Civility

Michael Fann, TN PRIMA

10:00 a.m. – 11:00 a.m.

Special Events Risk Management:

Lessons Learned from the DNC

11:15 a.m. – 12:15 p.m.

Rate Your Organizations

Safety Culture

12:15 p.m. – 1:30 p.m.

Lunch with SC PRIMA

Employment Law Update

1:30 p.m. – 2:30 p.m.

“Data-mining” your Loss Runs

2:45 p.m. – 3:45 p.m.

Drug Testing

Tuesday, March 12, 2013

9:30 a.m. – 10:30 a.m.

Concurrent Sessions

Session 1

Severe Weather Planning

Session 2

Contractual Liability

11:00 a.m. – 12:00 p.m.

Concurrent Sessions

Session 1

Functional Capacity Evaluations

Session 2

Social Media and

Employment Decisions

Who Is The WCIRB And What Do They Regulate?

October 10, 2012 By JL Risk Management Consultants

Who Is The WCIRB ?

What do they regulate and who is the WCIRB ? I received this question on the WCIRB last night from a California employer that had grown large enough to receive an X-Mod. Congratulations on your company’s growth in a tough economy. Sometimes, it is best to get back to the basics when analyzing Workers Compensation.

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The WCIRB is the acronym for the Workers Compensation Insurance Rating Bureau of California. The organization is very similar to NCCI. They are the data gatherer for info that feeds into each California employer’s Experience Modification Factor (XMod).

Some companies are too small to be rated in California. The minimum pure premium for an X-Mod is presently $25,225. The pure premium figure is not the premiums your company has paid.

The bureau holds conferences/workshops usually four or more times a year. I have found them to be very educational. The staff has always treated me very professionally and would help me as much as possible in any given situation.

One very important fact is the WCIRB only sets advisory rates. They are not directly responsible for how much you are charged in Workers Comp premiums. Your insurance carrier will usually deviate from their recommended rates by filing a Loss Cost Multiplier.

This is from the WCIRB’s About Us web page.

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The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) is a California unincorporated, private, nonprofit association comprised of all companies licensed to transact workers’ compensation insurance in California, and has over 400 member companies. No state money is used to fund its operations. The operations of the WCIRB are funded primarily by membership fees and assessments.

To accurately measure the cost of providing workers’ compensation benefits, the rating agency performs a number of functions, including collection of premium and loss data on every workers’ compensation insurance policy, examination of policy documents, inspections of insured businesses, and test audits of insurer payroll audits and claims classification.

The WCIRB employs approximately 200 people and maintains two offices. The home office is located in San Francisco, and a small Southern California field office is located in Cerritos.