In a letter to Insurance Commissioner Dave Jones, the agency said the proposed increase in pure premium rates average $2.51 per $100 of payroll, higher than the current $2.41 average. It said the amount reflects continued deterioration in projected losses and loss adjustment expenses and continued sluggish economic growth "resulting in less optimistic economic forecasts of wage level growth" compared to those in the WCIRB's January rate filing submitted last August.
It attributed the deterioration to:
- Continued adverse loss development on recent accident years.
- A significant increase in projected allocated loss adjustment expenses.
- Higher than expected claim frequency levels on the 2010 and 2011 accident years.
The letter pointed out the rates, which reflect loss costs including loss adjustment expenses per unit of exposure, "are only advisory in that insurers may, and often do, use pure premium rates other than the proposed or approved pure premium rates in establishing the rates they will charge."
It said that in accordance with Jones' directive last June, the proposed advisory rates are "benchmarked against the industry average filed pure premium rates. Additionally, as in the January 1, 2012 pure premium rate filing, the WCIRB has presented information regarding insurer rates, system costs and the insurance market." Commissioner Jones will hold hearings on the proposal.
Meanwhile, the rating agency said statewide written premiums increased by $1 billion for the second consecutive year, rising to $10.8 billion for 2011. Its report on fourth quarter 2011 insurer experience also projected an industry average charged rate for 2011 of $2.39 per $100 of payroll -- 3 percent above 2010 and 11 percent above 2008. "However, the 2011 industry average charged rate remains 62 percent less than the pre-reform high in the second six months of 2003."
South Carolina. Meanwhile, South Carolina's Department of Insurance is continuing to review a proposed 7.3 percent increase in loss costs. NCCI cited increasing frequency and deteriorating workers' comp claims experience for the needed rate hike. If approved, the increase would take effect in July.
Read more at the WorkersComp Forum homepage.
April 30, 2012
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