For the first time in six years, an interim pure premium rate advisory will not be issued by the California Insurance Commissioner’s office because of market strength. In the past, the commissioner issued the advisory after receiving a recommendation by the Workers’ Compensation Insurance Rating Bureau (WCIRB). However, the California Department of Insurance (CDI) did not hold its pure premium rate advisory hearing because the WCIRB did not file an interim pure premium rate earlier this year.
“I am pleased that stability in the workers’ compensation insurance marketplace has eliminated the immediate need for a pure premium rate advisory,” stated Commissioner Steve Poizner. “Nonetheless, I remain committed to maintaining a vibrant workers’ comp market and vigilant that injured workers be treated promptly and fairly.”
The pure premium rate advisory is a recommendation used by the workers’ compensation insurance industry as a benchmark for filing its rates.
WCIRB data indicates — and forecasts — that insurer pay-outs for workers’ compensation benefit costs have been relatively level since 2005, according to CDI. In January 2008, Poizner recommended no change in workers’ compensation insurance rates based upon the data provided by WCIRB at that time. Since Jan. 1, 2004, the pure premium rate has cumulatively decreased 65 percent.
Past system reforms appear to continue their beneficial impacts, the commissioner said. Currently, insurers are expecting to pay out only 48 cents in claims for every dollar collected in premiums.
“I strongly believe there is room for lower workers’ comp rates,” Poizner added. “The historical data on loss ratios going back to at least 2004 indicates opportunities for cost savings which should be passed along to employers.”
In May 2007, the commissioner called for a 14.2 percent decrease in workers’ compensation pure premium rates. At that time, Poizner also ordered various reforms to reduce rates by improving workplace safety and the accuracy of rate forecasting. To date, WCIRB is re-evaluating its pure premium rate methodology and formed a task force to overhaul is experience rating system, which has gone unmodified for more than 12 years. The report is expected to reach CDI by July.
Furthermore, CDI has initiated market conduct exams of workers’ compensation insurers. Poizner also convened a blue-ribbon fraud task force, which is studying and determining the most effective ways to fight workers’ comp fraud. The report is expected to be completed within weeks, the Commissioner’s office said.
Was this article valuable?
Here are more articles you may enjoy.