According to a press release issued today, the WCIRB Governing Committee has voted to authorize the WCIRB to file proposed 2012 “pure premium rates”.
The rate filing will be coming by August 19.
Here is the press release, quoted in entirety:
“Today, the WCIRB Governing Committee voted to authorize the WCIRB to file proposed January 1, 2012 pure premium rates. The proposed 2012 pure premium rates will reflect the anticipated cost of losses and loss adjustment expense expected to be incurred on policies incepting on or after January 1, 2012. As directed by the Commissioner, the WCIRB, in its January 1, 2012 filing to be submitted on or about August 19, 2011, will benchmark its proposed pure premium rates to the average insurer filed pure premium rates rather than the current advisory pure premium rates. In addition, the filing will analyze average insurer filed and charged rates as well as the impact of underlying system costs on pure premium rates. “
“The January 1, 2012 pure premium rates to be proposed by the WCIRB for each of approximately 500 industry classifications are projected to average $2.33 per $100 of payroll. This is 1.8% less than the corresponding average of insurer filed pure premium rates as of July 1, 2011. “
“While projected cost levels remain below pre-reform levels, the proposed 2012 pure premium rates reflect continued deterioration in experience since the reforms of 2002 through 2004 were fully implemented in 2005. Specifically, since 2005, the average cost of medical per indemnity claim has increased by 40%, the average cost of indemnity has increased by 31%, and the average cost of allocated loss adjustment expense per indemnity claim has increased by 55%. “
The press release concludes by noting “The WCIRB’s filing and related materials will be available in the Regulatory Filings section of the WCIRB website once it is submitted to the California Department of Insurance on or about August 19, 2011.”
The WCIRB was ordered to adopt new methodology in its rate request proceedings, so it will be interesting to see how the numbers play out.
An e-mail blast this afternoon from Brad Cain of the Workers’ Comp Executive claimed that the requested rate increase would be substantial, though Cain noted that his publication was “working to nail down hard numbers.”
What is interesting at this point is the numbers comparing the growth in various kinds of costs.
Indemnity costs increases have lagged way behind rising medical costs.
And the increase in “the average cost of allocated loss adjustment expense” is a whopper. Up by 55% since 2005, loss adjustment expenses have increased almost twice as fast as indemnity costs.
One can only look forward to the details in the filing, but it appears that the expenses of loss control are blowing out the doors.
Category: Understanding the CA WC system