WCIRB MAKES FILING PROPOSING 22.8% INCREASE IN PURE PREMIUM RATES EFFECTIVE JANUARY 1, 2010
The WCIRB submitted a pure premium rate filing to the California Insurance Commissioner recommending a 22.8% increase in advisory pure premium rates ("claims cost benchmark") with respect to new and renewal policies as of the first anniversary rating date of a risk on or after January 1, 2010.
The recommended increase in pure premium rates is based on the WCIRB's analysis of insurer experience valued as of March 31, 2009 and the WCIRB's analysis of anticipated cost increases stemming from two recent Workers' Compensation Appeals Board decisions (Ogilvie v. City and County of San Francisco and Almaraz v. Environmental Recovery Services/Guzman v. Milpitas Unified School District). In the filing, the WCIRB advised the Commissioner that the proposed increase is potentially subject to amendment based on the WCIRB's review of accident year experience valued as of June 30, 2009 and any legislative, regulatory or judicial actions taken subsequent to the date of this filing.
If the full 22.8% increase is approved by the Insurance Commissioner, the January 1, 2010 pure premium rates will still be, on average, 55% lower than the approved pure premium rates in effect July 1, 2003.
The filing also contains proposed amendments to the California Workers' Compensation Uniform Statistical Reporting Plan-1995 (USRP) and the California Workers' Compensation Experience Rating Plan-1995 (ERP). Some of the amendments are proposed effective in 2010 and others are proposed effective in 2011. Many of the proposed amendments to the ERP reflect the recommendations of the Experience Rating Task Force created at the behest of the Insurance Commissioner.
- Proposed Amendments for 2010
The proposed amendments to the USRP include changes to the Standard Classification System and the elimination of the requirement of insurers to report social security numbers due to privacy concerns.
The proposed amendments to the ERP include (a) amendments to the eligibility threshold, (b) classification expected loss rates, (c) the split formula used to segregate individual claims into their primary and excess components, (d) the ERP credibility ("B" and "W") values, and (e) various other provisions for clarity and consistency. The changes to the methodology to compute 2010 expected loss rates, the split formula and the ERP credibility values are consistent with the recommendations made by the Experience Rating Task Force.
If approved, these changes would become effective January 1, 2010. - Proposed Amendments for 2011
The proposed amendments provide that the Experience Rating Worksheet issued by the WCIRB (a) show the "loss-free rating" the employer would have received if it had been loss-free and (b) include an explanatory summary describing the principal objectives and components of experience rating. These recommendations are also consistent with the recommendations of the Experience Rating Task Force.
If approved, these changes would become effective January 1, 2011. - Other Proposed Amendments
The WCIRB is in the process of finalizing additional amendments to the USRP requiring that medical cost containment expenses be reported as allocated loss adjustment expense instead of medical losses. These amendments will be submitted to the California Department of Insurance prior to the public hearing on this filing.
A public hearing on the matters contained in the WCIRB's filing will be held Tuesday, October 6, 2009 at 9:30 AM in the 22nd Floor Hearing Room at the California Department of Insurance office located at 45 Fremont Street in San Francisco, California.
The filing and all related documents may be viewed and downloaded from the Regulatory Filings section of the WCIRB website.
