California’s Workers’ Compensation Insurance Rating Bureau’s (WCIRB) Governing Committee approved the filing of a proposed 11.9 percent increase in pure premium rates effective January 1, 2003 for new and renewal policies at their July 24 meeting.
“This is part of our normal rate filing process with the [California] Department of Insurance (CDI), we have to file advisory pure premium rates for the next year by July 31,” Jack Hannan, director of Marketing & Communications for WCIRB, told Insurance Journal. In September, the CDI will hold a public hearing for the proposed rate increase, thereafter the Insurance Commissioner will have 45 days to accept, reject, or make changes to the proposal.
Hannan further explained that of the 11.9 percent increase, 9.7 percent is due to an impending increase in benefits in California as the result of AB 749, which will become effective January 1.
“Had we not had a benefits bill, which put a 9.7 percent increase, this would have been different from previous years in that increase in loss and loss adjustment expenses would not have been as large. But because of the benefits bill, it actually ends up being within the same range as what we’ve been filing in the last couple of years,” said Hannan.
Hannan added that the original proposal for a 14.2 percent increase fell to 11.9 percent after the committee decided to drop a 2.1 percent loading for earthquakes. “That was based on a report by a catastrophe-modeling firm that came up with this recommended level of loading. The governing committee just decided not to submit that in this rate filing. It’s unclear whether it will come back.”
The committee also approved the filing of a proposed 5.9 percent increase in the pure premium rates applicable to the unexpired portion of 2002 policies as of January 1, 2003, reflecting the cost impact of AB 749 on 2002 policies.
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