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California: Workers’ Comp Premiums May Be Rising
By Business and Legal Reports, Inc.
Ever since the California workers’ compensation system was overhauled in 2003 and 2004, most employers in the state have seen a steady and even steep decline in their workers’ compensation insurance premiums. But employers should take note that starting in 2009, premiums may be heading north.
The Workers’ Compensation Insurance Rating Bureau (WCIRB) has recommended to California Insurance Commissioner Steve Poizner that workers’ comp insurance pure premium rates increase by 16 percent for new and renewing policies, effective Jan. 1, 2009. According to the WCIRB (which is a nonprofit association of workers’ compensation insurers and the designated statistical agent of the California Insurance Commissioner), its proposal is based largely on data indicating a steep rise in medical costs related to comp claims. The WCIRB has also indicated that if the governor signs legislation to increase workers’ comp disability payment levels, it will recommend an additional increase of 3.7 percent.
Even though the increase could come as a shock for some employers, rates will still be far below where they stood before the reforms. In particular, the average pure premium rate in 2009 would be $1.95 per $100 of payroll, compared to an average rate of $4.81 just before the reforms took effect.
The WCIRB’s recommendation is only advisory and must be approved by the insurance commissioner. Furthermore, any increases in pure premium rates are not binding on insurers, although most do use it as a benchmark.
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