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California Bureau May Ask for 30 Percent Workers’ Comp Increase

California Bureau May Ask for 30 Percent Workers’ Comp Increase

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California Bureau May Ask for 30 Percent Workers’ Comp Increase

California’s Workers’ Compensation Insurance Rating Bureau is considering requesting a 30 percent increase in pure premium rates for 2011 policies.

The news that California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) might ask for the increase came out of a meeting of the bureau’s actuarial committee. That committee makes a recommendation to the WCIRB’s governing committee, and then the governing committee makes the request to the states Department of Insurance. The governing committee is scheduled to meet next week, and will be considering the recommendation then, said Jack Hannan, the WCIRB’s communications director.

“They’re still working out the exact figure, but it is going to be about 30 percent,” he said.

The Department of Insurance has rejected the past two rate increases the WCIRB has requested, a 24 percent increase request last July and a 23 percent request this past January.

That is part of the reason for the current 30 percent request. Other reasons are that medical costs have been rising, 12 percent per year since 2007, and that there was a less than expected fall off in the number of claims made in 2009, given the fact that so many jobs have been lost in the present economic recession, Hannan said.

“The 30 percent – it could easily be 50 percent,” said James Moore, the president of J & L Risk Management Consultants, Inc., who blogs about the California workers’ compensation market. “The bills have been coming and nobody has been paying them. We think a 30 percent increase is extremely conservative.”

Though some have speculated that the Department rejected the earlier requests because the state’s insurance commissioner, Steve Poizner, was running for governor, Moore said he did not believe the governor campaign was a factor. The run for governor is now finished for Poizner. Rather, Moore noted that Poizner has previously vowed that he will not allow rates to increase until unnecessary costs in the system are addressed by insurers.

“I think he was just feeling the costs were too high,” Moore said.

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