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San Francisco, CA –
This week the Workers Compensation Insurance
Rating Bureau (WCIRB) announced it would submit
a filing to the California Department of
Insurance (CDI) recommending an approximate
22.8% increase in pure premium rates (or "claims
cost benchmark") effective January 1, 2010.
“It’s a long way from happening as this must go
to the Insurance Commissioner [for approval,
rejection or amendment] and companies can file
different rates,” said Scott Hauge, IBA West
member and president of Small Business
California in an email message to members.
Ultimately, the pure premium rate is purely
advisory and the Department of Insurance does
not set workers’ compensation insurance rates.
The WCIRB applied essentially the same
methodology it used to develop the July 1
filing, but they did consider the California
Department of Insurance's request to revise the
increase in light of the current recession and
that fact that employment is down across the
state.
"If we had done everything the same as in the
July 1 filing, the 23 would be like a 27," Dave
Bellusci, the bureau's chief actuary, reported
to the Workers’ Comp Executive.
“Last month, I rejected WCIRB's request to
increase the Cost Claims Benchmark, in part
because I found that insurers were inefficient
and were not fully using available tools to
control costs,” said Insurance Commissioner
Steve Poizner in a statement.
“Instead of striving to control medical costs, I
found that insurers were attempting to pass
unsupported costs along to employers in the form
of rate increases. They must work to be as
efficient as their self-insured counterparts,”
said Poizner.
"There are strong similarities between large
self insurers and insurance companies but it's
also fair to say that the infrastructure
supporting these operations is very different,"
said William Zachry, V.P. of Risk Management at
Safeway.
The WCIRB recommendation is based on two
principal components. First, the WCIRB's
evaluation of March 31, 2009 loss experience
produces an indicated increase in the claims
cost benchmark of 16%. This indicated increase
is primarily the result of increased medical
costs.
This trend was confirmed by Zachry who noted
that his company and other larger self-insurers
are definitely seeing an increase in medical
costs.
In addition, the WCIRB's analysis of anticipated
cost increases stemming from three recent
Workers' Compensation Appeals Board decisions
(Ogilvie v. City and County of San Francisco,
Almaraz v. Environmental Recovery Services and
Guzman v. Milpitas Unified School District)
indicates an additional increase of 5.8%. The
third case is currently on appeal.
The WCIRB expects to submit its pure premium
rate filing to the CDI on or around August 18,
2009. Once the filing is submitted, it may be
viewed or downloaded from the Regulatory Filings
section of the WCIRB website. (wcirbonline.org).
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