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| | Dave Jones Discusses New Calculation Of California’s Workers’ Compensation Pure Premium Rate
By Lonce LaMon - September 29, 2011
Dave Jones, California’s Insurance Commissioner, explained this past Tuesday, September 27th, why the Workers’ Compensation Insurance Rating Bureau (WCIRB) is restructuring how California’s workers’ compensation pure premium rate is calculated. He delivered this explanation at a public hearing in Sacramento, and his actions were supported by the Association of California Insurance Companies (ACIC).
Jones and the ACIC are on the same page with a new method of analyzing rates that insurers have filed and are using as a benchmark to make the pure premium reflect the market rate.
The president of ACIC, Mark Sektnan, told the Insurance Journal as he was leaving the hearing, “We’ve kind of trued up the system again.” He blamed the way rates are presently calculated on former California Insurance Commissioner Steve Poizner.
The WCIRB previously recommended rates benchmarked to the approved pure premium rates. Jones has now directed the WCIRB to compare the January 1, 2012 rates against the average insurer-filed pure premium rate.
The average pure premium rates proposed in the filing under the new method discussed at last Tuesday’s hearing is $2.33 per $100 of payroll. This is 1.8% less than the pure premium rates that were filed in July 2011. Before 2003 when the workers’ compensation reforms were enacted, employers were paying $6.29 per $100 of payroll.
Mark Sektnan further told the Insurance Journal, “It is vital during this rocky economy that employers get a realistic projection of what their costs will be to protect their employees from work place injuries.”
Coming up very soon, Dave Jones will ask the WCIRB for additional input. Then before November 1st 2011 he will determine what he believes the pure premium advisory should be. Those will be the rates that will take effect for January 1, 2012 renewals.
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