California’s State Compensation Insurance Fund today announced it has filed a 5 percent rate increase in collectible premium. The revised rate will apply to new and renewal workers’ compensation policies effective on or after January 1, 2010.
“The principal driver of the rate increase is medical inflation,” said Doug Stewart, State Fund Interim President and CEO. Medical treatment costs have increased significantly, according to the California Workers’ Compensation Institute, and continue to apply upward pressure to workers’ compensation. The average annual medical inflation rate is 14 percent since 2005.
Although manual rates increased 8 percent with this filing, other changes to the rate filing will result in an overall 5 percent increase in collectible premium. State Fund premium levels have fallen significantly since 2003, and even after this increase, will be 43 percent below pre-reform levels.
The announcement of this rate increase comes one day after state Insurance Commissioner Steve Poizner rejected a request for a 22.8 percent increase in the cost claims benchmark from the Workers’ Compensation Insurance Bureau. In rejecting the request, Poizner said it would have a hard impact on a struggling economy.
“We understand the strain that California’s businesses are experiencing in the current economic situation,” Stewart said. “State Fund offers group discounts, a merit rating plan, and lower-than-average premiums in some classifications and industries Because of our size and role in the marketplace, State Fund serves as a stabilizing force in the California economy. We are committed to maintaining our financial strength, our open door policy of providing workers’ compensation insurance for any employer who needs it, and our promise to California to meet employers’ demands for insurance. ”
State Fund has approximately 170,000 policyholders ranging from small businesses to large group associations. Created by the California Legislature in 1914, State Fund is a nonprofit, self-supporting, competitive public enterprise that guarantees a permanent workers’ compensation insurance marketplace at cost for California employers. State Fund has acted as both a moderating and stabilizing influence on the workers’ compensation market since its inception.
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