California workers’ compensation insurers will be seeking a midyear correction — a 7.7 percent increase — in pure premium rates.
The Workers’ Compensation Insurance Rating Bureau of California reported that it will submit a July 1 advisory pure premium rate filing indicating a pure premium rate of $2.51 per $100 of payroll. This is 7.7 percent above the average pure premium rate of $2.33 proposed by the WCIRB in its Jan. 1, 2012 recommendation.
WCIRB, which represents the more than 400 private insurers writing workers’ compensation in the state, said the deterioration since the last filing was largely due to “increases in loss development on the 2010 accident year, increasing allocated loss adjustment costs, and lower forecasts of wage growth in the still-sluggish California economy.”
The WCIRB Governing Committee expressed concern about the rise in several key cost drivers and, as a result, directed the WCIRB to submit the July 1 advisory pure premium rate filing.
Increasing loss development has caused the estimated ultimate 2010 accident year loss ratio to grow from 80.3 percent in the January 1, 2012 filing to 86.5 percent, according to WCIRB.
WCIRB’ actuaries reviewed a preliminary analysis of the recent growth in indemnity claim frequency which suggested that the increase in frequency was attributable to growth in cumulative injury claims, a shift in the proportion of all claims involving indemnity benefits, and increases in the number of late reported claims.
They also reviewed the results of a recent WCIRB claim survey which suggested that many of the recently reported cumulative injury claims involved employees that did not return to work with the employer at the time of injury (76 percent), injuries to multiple body parts (65 percent) and/or a psychiatric component (46 percent).
The WCIRB said it anticipates submitting the filing by April 13, 2012.
The indications are based on an actuarial committee review of Dec. 31, 2011 experience.
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