Posted on 08 Apr 2011
Last week the Workers’ Compensation Insurance Rating Bureau of California's (WCIRB) governing committee announced that it would be recommending a 40% pure premium rate increase in the state. It has since backed way from this recommendation, forgoing sending any rate filing to California’s insurance commissioner.
According to a WCIRB spokesman, the committee instead will be sending an informational filing that will include an analysis of insurers’ loss experience and “will reference that pure premium rates are inadequate by roughly 40%."
The governing committee was concerned that requesting a steep increase in the pure premium rate would cause panic among employers that might misconstrue its action to mean insurance policy prices would immediately increase by 40%, observers said.
Pure premium rate hikes do not result in an equal price increase for employers renewing their workers comp coverage. Insurers also must consider factors, such as market competition, when setting their pricing. What's more, California’s insurance commissioner must approve any WCIRB call for a rate increase and the commissioner can only recommend that insurers adjust their rates; he cannot order them to do so