Calif. Rate Bureau Seeks 10.1%. WC Hike

"We are projecting that rates approved last year are inadequate," he said.

The proposed increase will be the subject of a hearing, probably in May, after which State Insurance Commissioner Harry W. Low can accept or reject the recommendations or ask for a modification, Mr. Hannan said.

This is only the second time since California adopted open ratings in 1995 that the WCIRB has asked for a mid-term correction, according to Mr. Hannan.

He said that last year a similar request had been made for a 1.1 percent hike, which was rejected. The correction had been sought because of the impact from pending legislation, "but the legislation did not pass," Mr. Hannan explained.

The proposed 10.1 increase would be effective July 1 and would be on top of a 10.2 percent rate boost that took effect on Jan. 1.

Mr. Hannan said the WCIRB has studies underway "to figure out what's driving the losses." He said the WCIRB has no idea what all the forces are behind the worsening experience although it is known that "medical costs are certainly increasing faster than inflation."

In the California open insurance market, Mr. Hannan said rates have been going up dramatically and insurer "prices have been increasing in double digits" percentagewise.

Mr. Hannan said the proposed increase does not factor in the legislature's recent approval of a rise in benefits. That will be reflected in the recommendation for rates to take effect Jan. 1, 2003, he said.