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Aug 10, 2010

California Work Comp

Although it is not official, the Workers Compensation Insurance Rating Bureau (WCIRB) announced just a few days ago it's findings regarding 2011 recommend California work comp rate increases. It is not good news for employers who have operations in California.

The 30 percent recommendation follows two years of declining claims experience in the state. Employers should be prepared for this onslaught in rate and pricing adjustments as insurers will begin raising base rates, removing credits, adding debits, and ultimately non renewing business which is not profitable.

The last hardening of the work comp insurance market took place in 2000 and lasted through Jan 2004 when legislative changes were enacted and claims costs fell.

The claims costs from the legislative changes have now been fully enacted and the primary driving factors are medical inflation, and significant increases in indemnity losses.

Employers can control their experience modifications, but cannot control the pricing of the respective insurers. However, they can actively begin closing claims and reducing the costs affiliated with existing cases files. Identifying the true effectiveness of safety plans should be evaluated. Often times an above average ex mod for a long history is an indication that the existing plan may lack the correct strategies to reduce worksite injuries.

Getting prepared now will help you negotiate better terms and rates when your work comp renews next year. Better preparation for dealing with underwriters 9-12 months in advance of a renewal can make a substantial difference in your financial health.

For more information, feel free to call me at 661 332 0382, or drop me an email at