The top 100 workers’ comp insurers writing business in California, filed for an average pure premium rate increase of 2.8% for 2012, according to a the Department of Insurance.
The top 100 carriers account for 96.7% of California’s workers comp insurance market, said Dave Jones, the state insurance commissioner. Jones said the average filings by insurance carriers showed that the new benchmarking system the Department of Insurance and the Workers’ Compensation Insurance Rating Bureau implemented last year is working as it should.
Jones ordered last November that the advisory pure premium rate for policies incepting on or after Jan. 1, be set at $2.30 per $100. Average filed rates at the time were $2.37 per $100 of payroll, and the Rating Bureau had recommended that the average rate be set at $2.33.
The average rate insurers have on file after the latest round of rate filings by the industry was $2.44 per $100 of payroll, according to an article in the Workers’ Comp Executive.
But, in reality the filings mean insurers are charging more than the benchmark rate because they believe it may be too inadequate to cover their claims and claims adjusting expenses.
Indeed, data show that the cost of claims and adjusting them continues to rise, driving up insurers overall expenses. Some of the main cost drivers include medical expense inflation as well as pharmaceutical costs.
Also, the pure premium rates set by the Insurance Department are only advisory and are supposed to serve as guideposts for how insurers price their policies. The pure premium rates do not include other costs, such as taxes, other overhead and commissions among other expenses. As a result the rate that employers will be paying will vary greatly depending on the industry the company is in, its insurance carrier and the employers’ individual claims history.
Here’s a smattering of pure premium rate filings from a cross-section of large insurers writing business in California.
Pure Premium Rate Filings Company Rate increase
Ace Property and Casualty Insurance Co. 16%
Hanover American Insurance Co. 12.9%
Pacific Employers Insurance Co. 11.2%
Continental Casualty Co. 0%
Zurich American Insurance Co. 6.4%
Lumberman’s Underwriting Alliance 10%
Everest National Insurance Co. 3%
Seabright Insurance Co. 10.9 %
Liberty Mutual Insurance Co. 0%
Preferred Employers Insurance Co. 4.8%
Pacific Compensation Insurance Co. 7%
Republic Indemnity Co. of California 8.1%
State Compensation Insurance Fund 0%
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