Calif. Comp Rates Drop 13.9 %, Says AIA
NU Online News Service, July 7, 1:49 p.m. EDT?Helped by legislative changes, workers' compensation rates on average dropped nearly 14 percent over the past 12 months in California the American Insurance Association said today.
The organization said it surveyed and compared 190 mid-term pure premium rate adjustments filed by insurers, as of July 1, with rate filings made for policies starting or renewing on or after July 1, 2003, and found that on average, the rates decreased 13.9 percent during this 12-month period.
According to AIA, reform legislation passed last year and this spring has sparked a 26 percent swing in average workers' compensation rates.
The group noted that in July 2003, that California's Workers' Compensation Insurance Rating Bureau advised State Insurance Commissioner John Garamendi to increase the average pure premium rates by 12 percent for policies, effective Jan 1, this year. This means, AIA said, that there has been a swing in rates, on average, of 26 percent.
"Because three reform measures have become law since September 2003, we are starting to turn the corner on escalating system costs. These reforms are bringing stability and predictability to California's workers' compensation system," said Ken Gibson, AIA vice president, western region.
"Just a year ago," Mr. Gibson said, "the WCIRB recommended a 12 percent rate increase. In the span of only nine months, insurers have actually decreased rates an average of almost 14 percent."
"The good news is that both Insurance Commissioner Garamendi and the WCIRB expect additional cost savings once all aspects of the reform legislation are implemented," said Mr. Gibson. "In order for these projected savings to become realities, it is critical that Commissioner Garamendi and policymakers use their influence to ensure that the implementation process stays on track and that the reforms are implemented as they were intended and not sabotaged by loopholes devised by applicants' attorneys and other providers."
The American Insurance Association represents over 450 major insurance companies that provide all lines of property and casualty insurance and write more than $115 billion annually in premiums.
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