The initial filing in August reflected premium, loss and loss adjustment expense experience as of March 31, 2012. The WCIRB now has accident year experience valued as of June 30, 2012. The WCRIB noted the additional information in its refiled rate request but said its decision was primarily based on the impact of the new reform law.
"The average indicated January 1, 2013 advisory pure premium rate reflecting the impact of SB 863 as well as June 30, 2012 experience is $2.60 per $100 of payroll, which is 9.3 percent higher than the average July 1, 2012 industry filed pure premium rate of $2.38 per $100 of payroll," the WCIRB said in its rate filing. "Typically, the WCIRB proposes pure premium rates consistent with the most current actuarial indication."
In this case, however, the bureau is changing course. Instead, it is proposing Jan. 1, 2013, pure premium rates that average $2.38 per $100 of payroll, "which is the industry average filed pure premium rate as of July 1, 2012."
The WCIRB cited several uncertainties surrounding the reform legislation, including regulations that have not yet been promulgated and the potential for significant additional cost savings beyond that which is currently quantifiable. The bureau estimates the current quantifiable provisions of S.B. 863 "will decrease the cost of losses and loss adjustment expenses on 2013 policies by 4.9 percent."
The legislation increases permanent disability benefits in 2013 and 2014. Additionally, it enacts structural reforms to the benefit delivery system, several of which require the promulgation of regulations or fee schedules.
"Beginning now and as the regulations take shape over the next several months and beyond, the WCIRB will continue its analysis of the cost impact of SB 863 and will keep you apprised of our ongoing evaluation of the Bill and its impact on advisory pure premium rates," the WCRIB said in its correspondence with the California insurance commissioner.
Read more at the WorkersComp Forum homepage.
October 29, 2012
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