The At Risk Newsletter

November 2008

As 2008 draws to a close, the 2009 workers’ compensation insurance picture is beginning to come into focus…

When I last provided an update in August, the was a consensus that 2009 rates could increase 8 to 10% - with perhaps an additional increase if the California legislature repeals portions of the 2004 reforms that address permanent disability benefits. The following recent events have brought the first signs of clarity as to what we can expect for 2009:

1). In August, the Workers’ Compensation Insurance Rating Bureau recommended a 16% average increase for each of the 438 different workers’ compensation classifications. On 10/24, the California Department of Insurance (“DOI”) provided an “advisory” that insurers should only seek approval to increase 2009 rates an average of 5%. Even though the DOI is only supporting a 5% average rate increase, insurers are permitted to request approval for higher average rate increases if their claims data justifies such. It is important to note that some of the classifications could see a rate increase of up to 25%. This is because statewide claims data is compiled separately for each of the classifications and some of the classifications have generated greater claims frequency and higher severity than others. Insurers have now begun to submit (“file”) their proposed 2009 rates to the DOI and the DOI will begin the process of reviewing them for approval and use prior to January 1st.

2). On 11/13, State Fund (California’s most prominent insurer) submitted an average rate increase of 8.9% to the DOI for approval. The DOI generally approves State Fund’s filing requests, however it will occasionally only approve a portion of the increase. State Fund’s rate filing is significant because many other insurers have been waiting to see what State Fund is going to do before they submit their filings for approval. Over the next few weeks, we should begin to get a feel for how closely the DOI will stick to its target of a 5% average rate increase. With so many insurers requesting approval of their rate filings, the DOI will be facing a logjam and may not be able to process all of their filing approvals until very close to the end of December. With this said, some of our January renewal proposals may not become available until the last week of the year.

3). Now that last week’s elections have further entrenched the Democratic partisan dominance in the California legislature, we can expect a strong push by labor unions and attorneys to repeal portions of the reforms that were passed in 2004. Specifically, legislators appear likely to increase permanent disability awards and make other changes that would increase the cost of claims. Depending upon the magnitude of the potential changes, the DOI may approve an additional 2009 rate increase that takes effect sometime after January 1st. “Mid-term” rate increases have historically been implemented on July 1st.

What Risk Concepts Will Do

Risk Concepts will continue to heavily market each client’s renewal and present as many options as possible – including proposals from the most aggressive insurers that place low rates as a priority over service (we’ll give you our recommendations, however we want you to see all of your options). Our office accesses more than 40 workers’ compensation insurers and is well aware of which insurers are the most competitive for a given type of risk. If appropriate for some clients, we may present options that include non-traditional concepts such as deductible and self insured group plans. Risk Concepts will continue to monitor open claims and confirm the accuracy of experience modification calculations. Also of significant importance, Risk Concepts encourages clients to take advantage of the wide array of resources that we can provide (at no cost) that promote workplace safety, reduce claims, increase employee productivity and reduce your experience modification (one of the relatively few things that is somewhat within your control).

What You Can Do

Take advantage of Risk Concept’s offer to review all aspects of your workplace safety environment, program and culture. We can provide you with customized and ready-to-use OSHA-required safety programs – which include, but are not limited to: Illness & Injury Prevention Programs (“IIPP”), vehicle fleet safety programs, complete material for employee safety meetings, OSHA recordkeeping, etc… Once these resources are implemented, you will likely benefit from a reduced experience modification and greater marketability to prospective insurers (which is especially valuable when rates are increasing). Lastly, please keep in mind that Risk Concepts does not charge anything for these resources – it’s our way of providing a level of client service that distinguishes our office as a “trusted advisor” - worthy of your confidence and loyalty.

Please give me a call at (925) 250-8168 with any questions of if I may otherwise be of assistance.

We thank you for your continuing confidence and loyalty – it is never taken for granted!

Past Newsletters

November 2007:

The recent Southern California wildfires have again highlighted the need for policyholders to understand the basics of their homeowners’ coverage.

The attached article provides an excellent review of a typical homeowners’ policy as well as what you should do before and after a loss.

Is your current policy up to date???

Please read Consumer Insurance Guide - Southern California Fires, The Recovery Process Begins for guidance in receiving the most benefit from the insurance coverage you have purchased.

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