The Workers’ Compensation Insurance Rating Bureau California, an industry-supported advisory group, has officially recommended an 8.7 percent rate increase to the California Department of Insurance
That’s smaller than a 9.5 percent increase that the trade journal Workers’ Comp Executive reported last week as the number an actuarial committee was considering. Any advisory rate recommended by the California Department of Insurance would take effect Jan. 1.
But an Oct. 23 letter that was hand-delivered from WCIRB to Insurance Commissioner Dave Jones‘ office said the advisory group is recommending an 8.7 percent jump in the so-called “pure premium” rate. The 8.7 percent is more than a September recommendation by the same group because it includes a 1.8 percent boost to cover projected increases in physician fees, due to a new law signed by Gov. Jerry Brown.
The recommendation is now in the hands of Jones. A hearing is being held today, Monday Oct. 28, to review the proposed increase.
The commissioner can accept, reject or modify the recommended increase. The state’s workers’ comp insurers often follow the commissioner’s guidelines, but aren’t required to do so.
The new recommendation could boost average pure premium rates to $2.75 per $100 of payroll, or 8.7 percent greater than the California comp industry’s average pure premium rate as of July 1, which was $2.53.
But a policyholder’s industry and past experience play a large role in determining actual rates, and insurers can choose to dive below or jump above the advisory rate the commissioner ultimately signs off on.
Jack Hannan, a WCIRB spokesman, said the group didn’t ever propose a 9.5 percent increase, saying that number came from Workers’ Comp Executive, using its own analysis.
Commissioner Jones has yet to comment on the recommendation from WCIRB.
Dale Debber, publisher of Workers’ Comp Eexecutive, argues that his publication is calculating the rate recommendations based on data from WCIRB, using “the traditional way of calculating it.” He says the rating bureau has used a novel approach since Jones took office, in his view because the commissioner is “manipulating” the numbers to make them more palatable to voters.
Chris Rauber’s beats include health care, insurance and the wine industry for the San Francisco Business Times.
Workers’ comp rating bureau recommends 8.7 percent boost in basic workers’ comp rates – San Francisco Business Times.