NU Online News Service, April 5, 3:05 p.m. EDT
The California Workers Compensation Insurance Rating Board's (WCIRB) Actuarial Committee said its analysis continues to show "significant pure premium rate inadequacy," which could lead to a rate increase request up to 12 percentage points higher than the 27.7 percent request made for Jan. 1.
The Actuarial Committee says in a statement that the deterioration in experience is attributable to, among other factors, continued adverse loss development on the 2009 accident year, high emerging costs on the 2010 accident year driven by an increase in claim frequency, and less optimistic forecasts of statewide wage-level growth.
In November 2010, former California Insurance Commissioner Steve Poizner rejected WCIRB's filing for the 27.7 percent increase in the state's workers' comp benchmark rate. He said many of the costs in the system are avoidable, and added that insurers do not take advantage of available efficiencies.
Jack Hannan, WCIRB communications director, says there has been no change in the benchmark since January 2009. He adds that the Actuarial Committee's recent analysis accounted for further rate inadequacy built on top of the existing 27.7 percent inadequacy that was rejected in November.
Adverse developments, he says, have added another 10-12 percentage points, meaning rates are now inadequate by nearly 40 percent.
WCIRB's Governing Committee is meeting tomorrow, but Hannan notes that a rate filing with the insurance department for July 1 adjustments may be delayed due to new information requests by the department.
While the department has called for insurers to use tools available to them before a rate increase is considered, Hannan says it is not within WCIRB's purview to enforce the department's wishes. He says the department's recommendations are public policy questions. WCIRB's statutory role, he notes, is to make rate recommendations based on the information reported to it by insurance companies.
He notes that based on the data WCIRB receives, the rate benchmark will have to be adjusted at some point.
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