WCIRB California gets approval for 8% Hike in Pure Premium

Source: California Department of Insurance

California Insurance Commissioner Dave Jones on Tuesday approved an advisory pure premium of $2.49 per $100 of payroll, effective July 1.

The new advisory rate is 8.26% higher than the $2.30 rate that took effect Jan. 1. The Workers’ Compensation Insurance Rating Bureau recommended a rate of $2.51, but Jones said in his order he approved a slightly smaller increase because the Rating Bureau recommendation included data from State Compensation Insurance Fund.

The new rate is also 3.3% higher than the industry average charged rate of $2.41 as of Jan. 1, 2012.

Jones said in his order that costs continue to increase, but for the time being, the average price charged to employers has held steady.

“Two conclusions can be made from this: First, it appears that, at least for the present, competition in the workers’ compensation insurance market and the surplus and capital position of insurers and associated returns are keeping premium increases in check,” Jones wrote. “Second, and as equally important, with increasing costs and the draw down of surplus and capital, this pricing trend will now continue. Eventually, premiums will increase for employers.”

Recently we wrote about the big announcement by NYCIRB to raise loss costs by 11.5%.  This week, we see WCIRB is following suit with an approved 8.26% increase in rates.  Brokers should ask themselves how they’re different than the competition.  If you’re a broker with big workers’ comp premiums in your book, make sure you have a tool that maintains clients and wins new business with no out-of-pocket expenses to yourself or your clients and offers you a revenue stream.