Controlling Workers Compensation Costs for Employers

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2015 Pure Premium Rates

Rates are going up again significantly. The carriers all hide behind the WCIRB when, in fact, they are the WCIRB. This will affect a lot of employers in California – there over 550,000.

Here are the 2015 Pure premium rates compared with the 2014.

pure premium rates 2015Of course, pure premium rates are 'Advisory'. None of the insurance carriers have to go along with the WCIRB and the DOI.

But, if you read their rate filings closely, you'll see that they all have a 'multiplier'. And, with in a very narrow range, that 'multiplier' remains the same year over year.

So, if ICW's 'multiplier' was 1.732 times the Pure Premium rate (as it was in 2012), it means that they simply pass on the pure premium increase (or decrease) in their filed rates.

Of course, filed rates are not the final number. But they set the 'height of the bar'. Obviously, an employer's X-MOD figures heavily in the final premium. The lower the X-MOD, the more discounts an employer can expect to receive. The inverse is also true. An employer with a high X-MOD cannot reasonably expect discounts of any magnitude. In fact, they will probably face surplus charges. So if you are one of California's 180,000 employers who qualify for an X-MOD, you should be working with your insurance broker to lower your X-MOD and reduce your workers' compensation premiums. Read more about what the X-MOD is and how it is calculated.

The WCIRB proposes the Pure Premium rates and the Insurance Commissioner usually 'rubber-stamps' them. And, the WCIRB calculates the X-MOD – based on Incurred Costs, not Actual Costs. At any given time, the 'reserves' on a claim are usually 50% - 60% of total incurred - or more.

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