Good News! Workers Comp Pure Premium Rate to Drop

By CMTA Staff

Capitol Update, March 25, 2005 Share this on FacebookTweet thisEmail this to a friend

Following the Governing Board’s recommendation, on March 25th, the California Workers Compensation Insurance Rating Bureau (WCIRB) is expected to officially release a 10.4 percent decrease in the pure premium rate for policies renewing or incepting on July 1, 2005. 

The huge decline is attributed to the 2004 workers’ compensation reform measures that have mostly been put into place. Additional reductions in premiums are expected when all of the regulations are firmly in place.

This is great news for insured employers who had begun to grow weary waiting for premiums to drop.  At last, employers will see a double-digit drop in premiums midyear that when combined with several small decreases since 2003, will provide a cumulative 31 percent decrease in premiums.  In addition, insured employers may see even more reductions if the changes bring healthy competition among insurance companies for employer premiums.

This is also great news for very large and self-insured employers. The rate recommendation, based on the rating bureau’s analysis of the latest actuarial data, confirms that the cost and frequency of injury claims have dropped.  That means that self-insured employer’s costs should drop too.

The official recommended reduction must also be endorsed by Insurance Commissioner John Garamendi because it provides insurers with a voluntary benchmark for policies that start or renew on July 1, 2005.  Historically, insurers follow the WCIRB recommendation.

It is too early to tell what, if any, impact the recommended rate reduction will have on legislation introduced this year to impose rate regulations on workers’ compensation insurers.
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