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WCIRB testifies that reform savings have gone their way



Officials at the Workers’ Compensation Insurance Rating Bureau of California, who testified in support of a recommendation to raise the advisory net premium by 7.6%, said savings from reforms implemented nearly a decade ago have gone their way.

But while the benefits from reforms adopted in 2013 and subsequent years are waning, WCIRB officials who testified during the insurance department’s hearing on the tariff recommendation on Tuesday also noted that the average prices charged are 50 years lowest.

And even if the Insurance Commissioner approves the recommended increase, the prices for insurance that will take effect on and after 1 September would still be lower than those approved for insurance that takes effect on 1

January 2020 or later.

WCIRB recommends that the Insurance Commissioner adopt an advisory net premium rate of $ 1.56 per $ 100 in salary, an increase over the current $ 1.45 adopted for insurances beginning on or after September 1, 2021. The commissioner approved an interest rate of $ 1.50 per $ 100. payroll for insurances that take effect between January 2021 and September 2021, and an interest rate of $ 1.57 for insurances that take effect in 2020. The average debited interest rate in 2015 was $ 2.98 per $ 100 of the payroll.

“The past decade of major systemic reforms of California’s workers’ compensation systems has provided historic cost savings that WCIRB has reported over the years and reported to the Department of Insurance, including cost reductions for drugs, driven in part by the dramatic reduction in opioid occupational injuries; hardware; the reduction of supplier liens in the system; and strikes by the Department of Insurance, the Division of Workers’ Compensation, local district attorneys and others on all forms of fraud, particularly major medical fraud, WCIRB President Bill Mudge said in his testimony on Tuesday.

California is now in a period after the reform where the savings from the previous decade that contributed to much lower interest rates are declining or are already reflected in the latest loss trends, said Mr. Mudge. Healthcare costs, once mitigated by reform regulations, are starting to rise, he said, and the effects of the economic transformation could lead to increases in frequency as new workers in new jobs are at greater risk of injury than long-term veterinarians.

Wages are currently increasing, and with employment compensation premiums calculated as a percentage of the wage bill, insurance companies do not have to charge the same amount in premiums when the wage bill is up. Mr. However, Mudge said that economic forecasts do not expect wage growth to continue at the current pace.

“Basically, it’s a period of caution for workers’ compensation costs and the adequacy of pure premium rates,” he said.

WCIRB’s Vice President and Chief Actuary Dave Bellusci said the reforms resulted in 11 consecutive rate cuts and brought the average interest rate charged to a 50-year low. But even before the pandemic, the effects subsided and more typical inflation patterns began to emerge.

Mark Priven, vice president and principal of special projects for the Bickmore Actuarial and consultant to public members of the WCIRB Governing Committee, said he would recommend that the commissioner adopt an interest rate of $ 1.44 per $ 100 on the payroll, a slight reduction from the current one. the interest rate.

Mr Priven explained that his stated interest rate is lower than what WCIRB recommends due to different forecasting methods. WCIRB uses adjusted paid losses to calculate medical inflation and compensation inflation, while Mr Priven said he uses a mix of paid losses and incurred losses.


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