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SACRAMENTO, Calif.—The Workers’ Compensation Insurance Rating Bureau of California backed off Wednesday from recommending a 40% pure premium rate increase.
The WCIRB’s governing committee voted to forgo sending any rate filing to California’s insurance commissioner. Instead, the WCIRB will send an informational filing that will include an analysis of insurers’ loss experience and “will reference that pure premium rates are inadequate by roughly 40%,” a WCIRB spokesman said.
The governing committee was concerned that requesting a steep increase in the pure premium rate would cause panic among employers that might misconstrue its action to mean insurance policy prices would immediately increase by 40%, observers said.
A week earlier, the WCIRB’s actuarial committee revealed “significant pure premium rate inadequacy” and found that insurers’ experience deteriorated more than 10% since former California Insurance Commissioner Steve Poizner rejected the bureau’s Jan. 1 filing requesting a 27.7% pure premium increase.
Pure premium rate hikes do not result in an equal price increase for employers renewing their workers comp coverage. Insurers also must consider factors, such as market competition, when setting their pricing.
Additionally, California’s insurance commissioner must approve any WCIRB call for a rate increase and the commissioner can only recommend that insurers adjust their rates; he cannot order them to do so.
Workers compensation medical expenses in California have risen steadily since the adoption of reforms from 2002 to 2004, according to new research.