The Workers’ Compensation Insurance Rating Bureau of California submitted amendments to the proposed 2002 pure premium rates previously recommended to the Department of Insurance at the end of July.
The filed pure premium rate, which amounted to around 10.2 percent, is a change from the 9.0 percent average change approved by the WCIRB Governing Committee at its Sept. 21 meeting. The newer figure was the subject of a Department of Insurance public hearing Sept. 26 in San Francisco.
The amended filing reflected several factors, including updated second quarter 2001 experience data and recently enacted changes to the inpatient hospital fee schedule.
Along with its recommendation for the 10.2 percent change in per premium rates, the WCIRB proposed an alternate set of 2002 pure premium rates that reflect the change in benefit costs which were a result of Senate Bill 71 and Assembly Bill 1176, which recently got approval from the Legislature. The pure premium rates are recommended for adoption provided Gov. Gray Davis signs SB 71 and AB 1176. The alternate set of pure premium rates reflects an average increase of 19.3 percent for 2002 policies.
In addition to having an effect on 2002 rates, the changes to the IHFS, along with any enacted benefit legislation, increase the cost of benefits on in-force 2001 policies.
As a result, the WCIRB has also filed amendments to the 2001 pure premium rates which would apply to in-force 2001 policies as of Jan. 1, 2002.
Specifically, the WCIRB has filed for a 1.1 percent gain if SB 71 and AB 1176 are vetoed by Davis and a 7.2 percent increase if Davis signs the legislation into law.
Back in March, the WCIRB considered requesting for a mid-year rate hike as a result of continued insurer losses, but after finding that only a 2-percent increase was warranted, chose to wait for its annual summer review.
The last rate increase approved by Commissioner Harry Low was a jump of 10.1 percent in the advisory pure premium in October of last year. At the time of the rate approval, Low noted the increase was mainly a result of worsening medical costs.
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