California Pure Premium Workers’ Compensation Rates Continue to Drop

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Representing over 25% of the workers’ compensation premium in the country, California is the heaviest weight in the overall profitability of the national system.  Considered to be the most volatile state for many years, California rates became the highest in the country.  Below an Oregon study that comes out every two years on overall cost of the workers’ compensation system.

In 2014, #1 Most Expensive

– http://www.cbs.state.or.us/external/dir/wc_cost/files/report_summary.pdf

This recent drop in pure premium rate will now make it interesting to watch as more carriers see California as a growth state.  To me, this indicates a sign of more competition to come in a system that is more profitable then given credit for at present time.

I am also very intrigued by these comments made by the WCIRB:

“Despite these positive trends, the Filing cautioned that historically high levels of loss adjustment expenses, persistently high rates of indemnity claim frequency, an increasing number of independent medical review requests, a spike in lien filings in early 2015, and persistent increases in temporary disability duration require continued monitoring as they may drive increased costs in the future.”

Coincidentally, FAPEO and NAPEO also see Allocated Loss Adjustment Expenses for its members as as such has sponsored the following program at the Workers Compensation Institute (“WCI”).  Come visit Orlando this coming week to hear about it… Information regarding the panel and overall session below along with the WCIRB bulletin.

About the Program:

“Allocated Loss Adjustment Expense (ALAE) is a significant cost of any workers’ compensation claim. This session will delve into the different methods of allocating loss expense, nuances and hidden costs, and expected benchmarks. By attending this breakout session, attendees will have a better understanding of expectations and questions to be asked when negotiating claim adjudication services.”

Tuesday August 25’th, 2015

8:30 – 9:30 am
The Real Cost of a Workers’ Compensation Claim: ALAE *

Program Moderator: 
Abram Finkelstein
Founder and President
StaffLink Outsourcing, Inc.
Plantation, FL 

Moderator:
Daniel Harris
Senior Director of State Government Affairs
National Association of Professional Employer Organizations
Alexandria, VA

Brian S. Fischer, Attorney
In House Legal Counsel
SUNZ Insurance Company, Inc.
Sarasota, FL

Paul Hughes
Chief Executive Officer
Libertate Insurance, LLC.
Orlando, FL

Henry Cabaniss
Executive Director
TriNet
Charlotte, NC

Look forward to seeing everyone in Orlando!  Actual Premium rate filing below –

-PRH

WCIRB Wire Alert

2016 Advisory Pure Premium Rate Filing Submitted to CDI 

Oakland, CA August 19, 2015 – Earlier today, the WCIRB submitted its January 1, 2016 Pure Premium Rate Filing (Filing) to the California Department of Insurance (CDI) proposing advisory pure premium rates that average $2.45 per $100 of payroll, which is 7.8% less than the corresponding industry average filed pure premium rate of $2.66 as of July 1, 2015, and 0.8% less than the average approved July 1, 2015 advisory pure premium rate of $2.47.

The proposed further reduction in the advisory pure premium rate level for January 1, 2016 follows a 10.2% reduction approved by the California Insurance Commissioner effective July 1, 2015. The primary drivers of the reduction include:

  • Medical losses continue to develop favorably
  • Recent severity growth continues to emerge below projections
  • Increases in projected wage growth in California due to economic expansion

Despite these positive trends, the Filing cautioned that historically high levels of loss adjustment expenses, persistently high rates of indemnity claim frequency, an increasing number of independent medical review requests, a spike in lien filings in early 2015, and persistent increases in temporary disability duration require continued monitoring as they may drive increased costs in the future. 

The Filing and all related documents, including a detailed executive summary highlighting the Filing’s major components, are available on the Regulatory and Pure Premium Rate Filings page of the WCIRB website (http://www.wcirb.com/).

The CDI will schedule a public hearing to consider the Filing. Once the Notice of Proposed Action and Notice of Public Hearing is issued, the WCIRB will post a copy on the Regulatory and Pure Premium Rate Filings page of the website.

For More Information

Regulatory and Pure Premium Rate Filings

Governing Committee Authorizes Filing (August 12, 2015)

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