State Compensation Insurance Fund has filed its first tiered rating plan with the California Department of Insurance.
The plan, which would apply to policies renewing or incepting on or after Sept. 1, is a move to expand State Fund’s range of pricing, according to Jennifer Vargen, senior vice president of marketing and communications for State Fund, California’s largest provider of workers’ compensation insurance.
“State fund has generally had one base rate and had modifiers off that base rate for any policy,” Vargen said. “What that did was limit the range of pricing that we could achieve.”
The rate filing calls for a zero net increase in overall rates, but manual rates will increase for some classifications, according to State Fund.
State Fund underwriters will be able to start quoting under the tiered rating Aug. 1.
“We believe this will be an important tool for us in helping all California employers manage the cost of their insurance,” Vargen said.
Vargen, who acknowledged that State Fund is an “organization in transformation,” said the switch to the tiered rating plan is not part of the organization’s ongoing efforts to reduce costs.
“This rate filing is definitely something that we’ve been looking at for some time,” she said.
Currently State Fund is in its second phase of its geographic strategy, part of an overall plan to cut costs, which included plans for massive workforce reductions earlier this year that were canceled in April following the voluntary exodus of 1,300 workers. The restructuring is expected to save State Fund $200 million a year.
At the end of 2010 State Fund announced a geographic restructuring initiative to reduce real estate. The first phase was completed in 2011, and the second phase will be unfolding in 2012 with more moves and closures in next several months, Vargen said.