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DANA POINT, California — The conditions that have caused the California Workers Compensation Insurance Rating Bureau to recommend an increase in California workers comp rates next year will not necessarily affect pricing for employers in the market in the near term, say speakers at the 2014 California Workers' Compensation & Risk Conference.
During a Wednesday panel discussion at the meeting in Dana Point, California, speakers said softer market conditions exist despite the “continued adverse medical loss development and high levels of indemnity claim frequency” that the San Francisco-based WCIRB cited in its pure premium rate filing to the California Department of Insurance in August.
WCIRB has asked the California Department of Insurance to raise the state's pure premium workers comp rate to $2.77 per $100 of payroll as of Jan. 1, 2015, compared with an average advisory pure premium rate of $2.68 in California as of Jan. 1, 2014.
“There may be a bifurcation or divergence between underlying costs and the prices charges to insureds in California,” said Robert Darby, San Francisco-based president of Berkshire Hathaway Homestate Cos. “What we are seeing is that this year's prices are flat or just up a little bit year over year.”
Mr. Darby said selected accounts with favorable loss experience may even see cost reductions at renewal. “Accounts that are performing well are expecting a rate decrease,” he said.
William Rabl, New York-based chief operating officer with Ace Risk Management at Ace USA, said workers comp rate increases for upcoming renewals are not expected to be as high as last year. “Rates are more a function of loss experience than anything else,” he said.
Duane Hercules, St. Louis-based president at excess workers comp insurer Safety National Casualty Corp., said even accounts with losses might expect slight changes in terms and conditions as opposed to rate increases. “It's more about the deductible than the rate,” he said.
The number of indemnity claims in California has increased in recent years, especially in the Los Angeles area, according to a report released this week by the Workers' Compensation Insurance Rating Bureau.