California rating bureau may recommend 8.6% workers comp rate increase

By: Roberto Ceniceros (Business Insurance) October 2013

California’s Workers’ Compensation Insurance Rating Bureau is expected to propose an 8.6% pure premium rate increase effective Jan. 1, 2014, subject to the approval of its governing committee, which meets on Wednesday.

Last month, the San Francisco-based rating bureau announced it was proposing that the California Department of Insurance raise the rates about 6.8% over the insurance industry average for filed rates as of July 1.

The WCIRB cited a deterioration in claims experience attributable to adverse medical losses and sharply increasing indemnity claim frequency as reasons for suggesting the increase.

But on Monday, the rating bureau’s actuarial committee recommended raising the previous amount by another 1.8% because of California’s adoption of a new fee schedule for compensating doctors.

The move to a resource-based relative value scale, used by Medicare to set physician compensation, was required by reforms adopted in 2012. It will help push pure premium rates to an average of $2.75 per $100 of payroll, up from $2.53 as of July.

California Insurance Commissioner Dave Jones can reject, accept or modify the WCIRB’s rate increase recommendation, while insurers are free to follow or reject the commissioner’s guidance on rate changes.
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