Calif. State Fund Files an Average 14% Rate Decrease
West News • June 1, 2005
State Compensation Insurance Fund has filed an average collectible rate decrease of 14 percent on new and renewal workers' compensation policies with an effective date on or after July 1, 2005. ...
Insurance Journal is not responsible for the content of the message below.
Subject: Fees Not Commissions
Posted On: June 10, 2005, 11:27 am CDT
Posted By: RIck Anderson
Comment:
Dear Chris,
Thank you for reminding me and reinforcing why, I became a broker in 1985. Note the operative word broker, instead of agent, though I wear both hats.
Let's take a look at the workers compensation COST TO OUR CLIENTS. For example, I have a client that had a pre ex mod rate of $6.42/$100 for their policy term effective 8/1/00 - 01. Written at 10% commission, the commission was $0.642/$100. For his current term effective 8/1/04 - 05, his rate is $17.50/$100. If I took the full State Fund commission of 5.5%, the commission would be $0.9625/$100.
This client had an employee seriously injured in a not at fault accident. We were immediately paid to replace our truck which was totalled. If you know the rules pertaining to subrogation recovery and experience modification, you know that this would impact our ex mod until recovery was completed. Due to the massive trauma to our employee, the fatality in the othe party's vehicle, and litigation, we were penalized for two years on the mod. This increased the mod about 35%, premiums about 35%, and commissions about 35%. Did I deserve another raise?
The system needs more reform and we all need to participate. We can enhance the environment for businessowners and job creation here in CA with an overall better Workers Compensation system.
I do not take 5.5% on my State Fund business, I even have a client at 1%. It has been my policy to offer disclosure of my commissions/compensation to my clients, I have never been asked.
If the State Fund is the only market for a class of business, they don't need people to "sell" their product. Let's do away with commissions for workers compensation and negotiate fees for our clients based on the work we do. If we provide expertise, solutions, and a long term cost effective plan for our clients, they will compensate us.
West News 
Subject: Fees Not Commissions
Thank you for reminding me and reinforcing why, I became a broker in 1985. Note the operative word broker, instead of agent, though I wear both hats.
Let's take a look at the workers compensation COST TO OUR CLIENTS. For example, I have a client that had a pre ex mod rate of $6.42/$100 for their policy term effective 8/1/00 - 01. Written at 10% commission, the commission was $0.642/$100. For his current term effective 8/1/04 - 05, his rate is $17.50/$100. If I took the full State Fund commission of 5.5%, the commission would be $0.9625/$100.
This client had an employee seriously injured in a not at fault accident. We were immediately paid to replace our truck which was totalled. If you know the rules pertaining to subrogation recovery and experience modification, you know that this would impact our ex mod until recovery was completed. Due to the massive trauma to our employee, the fatality in the othe party's vehicle, and litigation, we were penalized for two years on the mod. This increased the mod about 35%, premiums about 35%, and commissions about 35%. Did I deserve another raise?
The system needs more reform and we all need to participate. We can enhance the environment for businessowners and job creation here in CA with an overall better Workers Compensation system.
I do not take 5.5% on my State Fund business, I even have a client at 1%. It has been my policy to offer disclosure of my commissions/compensation to my clients, I have never been asked.
If the State Fund is the only market for a class of business, they don't need people to "sell" their product. Let's do away with commissions for workers compensation and negotiate fees for our clients based on the work we do. If we provide expertise, solutions, and a long term cost effective plan for our clients, they will compensate us.