Following the July 31 submission of its annual pure premium rate filing to the California Insurance Commissioner, the nonprofit Workers’ Compensation Insurance Rating Bureau proposed an average increase in pure premium rates of 5.5 percent effective January 1, 2001.
Pure premium rates reflect only the estimated cost of benefits and insurer loss adjustment expenses, not any other insurer expenses. Robert G. Mike, WCIRB president, expressed the group’s concern with the volatility of recent development patterns.
As a result of that concern, Mike announced that WCIRB would review accident year experience valued as of June 30, 2000 as soon as it is received. Subsequently, the pure premium rate level change proposed in WCIRB’s recent filing would be amended if appropriate. WCIRB claims the proposed increase is modest compared to the 18.4 percent increase approved last year.
However, it is needed in light of the continued deterioration in loss ratios.
Ultimate loss ratios for accident years 1998 and 1999 are projected to be 106 percent and 111percent, respectively. Record high combined ratios for both 1998 and 1999 of 147 percent and 149 percent, respectively, are also projected.
Mike advised that insurer average statewide rates for 2000, as reported March 31, 2000, are approximately 7 percent below pure premium rates and 30 percent less than the projected cost of benefits and total insurer expenses.
Also recommended were changes to the Uniform Statistical Reporting Plan, the Miscellaneous Regulations for the Recording and Reporting of Data, the Experience Rating Plan, and the United States Longshore and Harbor Workers’ Supplement to the Uniform Statistical Reporting Plan.
A public hearing has been scheduled by the California Department of Insurance for Sept. 21, in San Francisco to consider the WCIRB’s proposed changes. Copies of the WCIRB’s pure premium rate filing is available for a nominal cost by contacting the WCIRB Customer Service Department at (888) 22-WCIRB.
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