WCIRB May Reduce Rate Increase to 11.6%

September 6, 2012

Committees for the Workers’ Compensation Rating Bureau looking at data based on the savings promised by a bill to reform the state’s workers comp system may be recommending an adjustment to WCIRB’s upcoming pure premium filing.

However, more study is being sought to look at aspects of the bill, and earlier promises of savings may not be as big as originally believed.

It was originally thought the bill would system costs by about 3 percent, but that data seems to have deteriorated, and now the WCIRB committees are saying the net effect would be about 1 percent lower than that earlier 12.6 percent recommendation.

On Wednesday members of the Workers’ Compensation Ratings Bureau’s Actuarial Committee and the WCIRB Claims Working Group held a joint public meeting to review June 30 insurer premium and loss experience, as well as the potential impact on system costs from Senate Bill No. 863, the bill to reform the state’s workers’ compensation system.

“In its review of insurer premium and loss experience valued as of June 30, 2012, the Actuarial Committee noted a continued deterioration in insurer loss experience primarily due to increased paid loss development,” according to a note put out by a WCIRB spokesman on Thursday.

The indicated average Jan. 1, 2013 advisory pure premium rate based on the committee’s review of June 30 data was roughly 2 percent higher than that reflected in the WCIRB’s Jan. 1, 2013 pure premium rate filing, according to the bureau.

The Actuarial Committee and Claims Working Group also reviewed a preliminary WCIRB assessment of the impact of SB 863. The assessment suggested that the bill would reduce overall system costs by 4.5 percent, or $850 million, in 2013 and, following an increase in permanent disability benefits in 2014, the combined impact of all the bill’s provisions that are able to be calculated would reduce system costs by 1.4 percent, or $270 million annually beginning in 2014, the bureau stated.

These preliminary cost savings estimates equate to an approximate 3 percent indicated reduction in the advisory pure premium rates contained in the WCIRB’s Jan. 1, 2013 pure premium rate filing submitted to the California Department of Insurance on Aug. 21.

Participants at the meeting discussed issues regarding to the potential impact of SB 863 provisions related to medical fee schedules, medical provider networks, the elimination of the future earnings capacity adjustment in permanent disability ratings, and independent medical review. These issues will be further discussed at a follow-up joint public meeting to be held later this month, according to the bureau.

On Thursday CDI advised WCIRB they will postpone the previously scheduled Sept. 24 hearing to allow for this additional review of SB 863. The WCIRB is in the process of scheduling the joint Actuarial Committee and Claims Working Group meeting. An agenda noting the meeting date, time and location will be issued when it is available. Once a new CDI hearing date has been scheduled, the WCIRB will issue a WCIRB Wire email alert and will post the information to the regulatory filings section of the WCIRB website.

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