California Business and commercial insurance trends as I see the California Insurance Market evolve from the perspective of a independent California commercial insurance broker. Industries I have clients in include non-profits, manufacturing, commercial property owners, technology and software to name a few. I'll be discussing the trends in California Workers Compensation, Property Insurance, E&O, Errors and omissions, Directors and officers, D&O, EPLI, and other coverages
Friday, August 15, 2008
California Worker's Compensation to increase in '09
As the trade journals have reported this week, California business owners can expect a new pain in worker's compensation renewal, an increase of 12-16%. For those that follow the group health care market these projected increases should not seem to be to big of a surprise. Due to increased competition for market share in California we have seen increased competition from work comp carriers to the point that most premiums have fallen 50% or greater over the past 3 years. As the market conditions show signs of changing we should see these rates beginning to firm up and increase over the next 1-3 years.
The Workers’ Compensation Insurance Rating Bureau of California, which is responsible for setting rates for the state fund, on Wednesday, August 13, recommended a 16 % pure premium rate increase that would be effective January 1 if approved by the board and insurance commissioner Steve Poizner. The WCIRB said it would recommend an additional 3.7 percent rate increase for January should California adopt a current proposal by the Division of Workers’ Compensation to change the state’s disability rating schedule. If California adopts the disability rating schedule changes, the WCIRB said it would also call for a 3.7 percent rate increase for the unexpired portion of 2008. The WCIRB said rising medical costs are responsible for the majority of the 16 percent rate increase it is recommending. California’s Department of Insurance can approve or reject the rate increase recommendation after holding a hearing. The insurance department’s ruling, however, is not binding on insurers. If California’s insurance department approves the WCIRB’s rate increase recommendation, it will erase a 14.2 percent decrease approved for July 2007.
Most major carriers, including Anthem (Formerly Blue Cross of CA), Blue Shield, Aetna, and most of the others have rolled out or are expected to roll out increases in health care premiums this year which also has a direct reflection on how workers compensation rates are formulated since they both rely on the cost of health care. The rising costs of California health care are a huge problem for employers, causing some to flee the state while forcing others out of business.
