WCIRB to Propose Increase in Pure Premium Rates in January 2005

July 22, 2004

The Workers’ Compensation Insurance Rating Bureau will propose a 3.5 percent average increase in the advisory pure premium rates for policies incepting on or after Jan. 1, 2005, based on an analysis of loss and loss adjustment experience as of March 31, 2004. Most of the proposed 3.5 percent increase is attributable to the increase in benefits enacted by Assembly Bill No. 749 that become effective on or after January 1, 2005. The WCIRB anticipates filing the proposed Jan. 1, 2005 pure premium rates with the California Department of Insurance during the last week of July. The insurance commissioner is expected to schedule a public hearing in mid-September to consider the proposal.

The WCIRB will review and, as appropriate, revise its proposed Jan. 1, 2005 pure premium rates, based on updated accident-year loss experience valued as of June 30, 2004 when it becomes available in early September. In addition, the WCIRB will review the impact of the permanent disability provisions enacted by Senate Bill No. 899 on benefit costs when the administrative director adopts a new permanent disability rating schedule. If a new schedule is adopted prior to the close of record, the proposed Jan. 1, 2005 pure premium rates will be revised to reflect the estimated cost impact of the new provisions.

The proposed Jan. 1, 2005 pure premium rates are, on average, 4 percent below the approved Jan. 1, 2004 pure premium rates, 18 percent below the approved July 1, 2003 pure premium rates, and 12 percent below the approved Jan. 1, 2003 pure premium rates. In addition, the proposed Jan. 1, 2005 pure premium rates are 27 percent below the Jan. 1, 2004 pure premium rates proposed prior to enactment of Assembly Bill No. 227, Senate Bill No. 228 and Senate Bill No. 899.

The WCIRB will make the rate filing available on its Web site once it is filed. Watch the WCIRB Web site for further information.

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