5 % - the first workers’ compensation insurance premium increase in 5 years is coming Jan. 1.  Although Insurance Commissioner Steve Poizer approved only a 5% increase in what he now calls a “Worker’s Compensation Insurance Claims Cost Benchmark” ­(the old term was “Pure Premium Advisory Rate”), his ruling does not limit what insurers can charge. 

His decision ignores the advice of actuaries within his own Department of Insurance who recommended a 9.4% increase, as well as the proposal of the WCIRB which proposed a 16% increase.

The Insurance Commissioner, who is gearing up for a run for Governor in 2010, is hoping that medical costs to treat work related injuries do not continue to increase as rapidly has they have in the past few years, or as fast as everyone else in the system expects.  Poizner, in his rate decision, wrote “I do not believe that the system will allow medical treatment costs to increase greatly.”

Yet, the data from all workers’ compensation claims paid in California clearly indicate that the savings generated by the 2004 reform law have worn off, and medical costs are again escalating:

View Larger Chart

Since the WCIRB recommendations were made, eight insurers have already filed for increased rates, ranging from 3.3% to 23.9%.   The Zurich Insurance Group and Benchmark Insurance are proposing 7.6% or below.  Most insurers are expected to file their rates between Nov.3 and Dec. 1, 2008 due to the requirement of 30 days notice prior to rates being effective. 

If you would like to know what rates are filed by your insurance carrier, just e-mail a request, listing the name of the insurer on your current insurance policy, and renewal date to info@dondressler.com.   (This is a free service to all newsletter subscribers.)

Adding even more pressure for higher workers’ compensation costs are the new, higher disability rates for 2009, due to the indexing provisions of current law.  California's State Average Weekly Wage rose from $914.60 to $956.20 for the 12 months ending March 31, 2008 - a 4.5 %  increase, which effective January 1, will push up the minimum and maximum weekly temporary total disability (TTD) rates for 2009 work injuries.

California's TTD maximum rate for job injuries that occur in 2008 has been $916.33 a week, but the maximum will jump to $958.01 on January 1, 2009.  The minimum rate goes from $137.45 for 2008 claims  up to $143.70 for claims with 2009 injury dates.

So what should you do to hold down your company’s workers’ compensation costs in this rising market?

1. Control injuries.  We are rapidly coming to the close of the calendar year, and you will be preparing your Cal/OSHA Injury Log 300- evaluate your results, compare them to prior years and industry standards.  If your experience modification is higher than 80- there is room for improvement.
2. Direct employee medical care.  Even now, 4 years after reform and the ability to have “life of claim medical control” almost 40% of all injuries do not use Medical Provider Networks.  Get your workers to the best available medical care immediately.  Stay in touch with the medical provider and the injured worker.  It really works to hold down costs.
3. Return injured workers to work.  It cost now an average of $46,517 per claim if lost time has to be paid for, either for temporary or permanent disability. 
4. Investigate every injury.  In working with clients and conducting investigations, in almost every instance we learn how to improve operations, safety and employee morale. 

None of these are new ideas, but as workers’ compensation costs have fallen 63% from the high point in 2003, some employers have gotten away from the basics.  This January 1 rate increase is not the last one, nor the largest one you will face.  Now is the time to take a hard look at your operations and see if you can improve.

Issue 28, May 2008

Quick Resources
Employers' Bill of Rights
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HR Kits for Safety and Convenience
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Case Studies
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Avoid Sexual Harassment Law Suits.
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