CTK E-Bulletin:
What's Happening Mid-Year with Workers' Compensation Rates in CA?

Many clients have been asking us if there will be a mid-term workers' compensation rate change again this year.  California employers have become accustomed to seeing mid- term rate increases take place July 1 over the past few years. The rate increase usually affects those employers whose policies renew between July 1 and December 31. The rate increase usually garners a fair amount of media coverage, and is often accompanied by comments from the Insurance Commissioner.

The WCIRB last fall recommended a rate hike of 22.8% as of January 1, 2010. But the Insurance Commissioner urged no rate increase, even though his staff had recommended a 15% increase. The State's largest workers' compensation carrier, the State Fund, did increase rates an average of 5% on January 1. Many private insurance carriers also implemented modest rate increases.

By comparison, it has been very quiet this year with regard to mid-term rate changes. The Workers Compensation Rating Bureau (WCIRB) did not submit a proposal for a mid-term rate change, and the Commissioner's office has been quiet on the matter. From this lack of significant mid-year rate change news and activity, it appears that the workers' compensation market should remain stable for the remainder of 2010.

However, the pressure to drive up rates still exists; primarily due to the increasing costs of medical care and the rising costs of work time lost due to employment related injuries. According to some recently published statistics, the estimated Ultimate Total Cost of a lost time claim has increased steadily since 2005:

2006:    $38,797
2007:    $45,141
2008:    $50,829
2009:    $55,600
2010:    $57,812

With claims costs increasing, this is the time to sharpen your safety program and diligently use your Return to Work Program. Rates and premiums are certain to increase in 2011, and the companies with the best safety records will get the best deals at renewal. The best defense against cost increases continues to be a well run safety program with a safe workplace (especially your clients' worksites). In these challenging times, safety is worth the extra effort. The financial benefits of reduced workers' compensation costs go directly to the bottom line.  For our clients operating outside of California, the need for safety remains just as important.

Need some tips on safety and claims management?  See the May/June issue of our Workers' Compensation Newsletter.  If you need some additional help on your safety program, please don't hesitate to call us.   

Rich Siemer - President

1240 North Lakeview Avenue, #240, Anaheim, California 92807 P 714.779.2000 F 714.779.4129