Calif. Workers’ Comp Rating Bureau Proposes Rate Decrease

September 15, 2006

California’s Workers’ Compensation Insurance Rating Board has proposed a 6.3 percent reduction in the pure premium rate.

On August 16, 2006, the WCIRB submitted its Jan. 1, 2007 pure premium rate filing to the California Department of Insurance (CDI) recommending changes to the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995 and the California Workers’ Compensation Experience Rating Plan – 1995 effective January 1, 2007. At that time, the WCIRB advised the CDI that the filing would be amended on or about Sept. 15, 2006 to reflect proposed changes to the pure premium rates to be effective Jan. 1, 2007.

On Sept. 14, 2006, the WCIRB amended its Aug. 16, 2006 filing to include a proposed 6.3 percent reduction in pure premium rates with respect to new and renewal policies with an anniversary rating date on or after Jan. 1, 2007. In addition to proposing a decrease in pure premium rates, the WCIRB also proposed a decrease in the experience rating eligibility threshold from $16,971 to $16,600.

The proposed pure premium rate decrease of 6.3 percent does not reflect the WCIRB’s estimate of the cost impact of Senate Bill No. 815 (SB 815). SB 815, which was recently adopted by the California Legislature and awaits action by the Governor, would double the cost of permanent disability benefits by 2009. The WCIRB estimates that the increase in permanent partial disability benefits specified in SB 815 will increase the total cost of losses and loss adjustment expenses on 2007 policies by 8.7percent. Mindful that SB 815 will become law if not vetoed by the Governor by September 30, 2006, the WCIRB also recommended that pure premium rates be increased by 1.8 percent, in lieu of the 6.3 percent reduction referenced above, if SB 815 is enacted. The WCIRB also announced it would submit its evaluation of the cost impact of SB 815 and new pure premium rates, which reflect the cost impact of SB 815 on 2007 policies, prior to the Sept. 28, 2006 pure premium rate hearing, if SB 815 is not vetoed in the interim.

A public hearing to consider the WCIRB’s proposed pure premium rate changes has been scheduled by the CDI for 9:30 a.m., Sept. 28, 2006 in the CDI Public Hearing Room located on the 22nd floor of 45 Fremont Street in San Francisco.

The filing and all related documents may be viewed or downloaded from the Filings section of the WCIRB Web site:

Source: WCIRB

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