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WCIRB to Recommend Significant Increase in Work Comp Base Rates

In recent workers' compensation defense news, the organization that advises California's insurance commissioner on workers' compensation base rates is currently considering a substantial rate increase.

According to several sources, the Workers' Compensation Insurance Rating Bureau (WCIRB) is more than likely going to recommend a 30 percent increase in the workers' compensation rates that insurance companies charge employers across the state.

The Actuarial Committee of the WCIRB met last Wednesday to assess the pertinent information (indemnity losses and medical losses) and came away with the opinion that an increase of at least 30 percent was necessary. Their final recommendation will more than likely be submitted to the Governing Committee of the WCIRB for approval sometime this week.

According to Jack Hannan, a WCIRB spokesman, the Governing Committee is expecting to submit its final recommendation to raise workers' compensation base rates to Insurance Commissioner Steve Poizner by August 17.

The Insurance Commissioner is free to either accept or reject the recommendations of the WCIRB. In addition, California's 400 licensed workers' comp companies may also accept or reject WCIRB's recommendations and establish their own rates. (They typically use the Insurance Commissioner's recommendations as their primary benchmark.)

The proposed 30 percent increase would affect all new and renewed policies starting January 1.

In November, Poizner rejected the WCIRB's recommendation for an increase of 22.8 percent, opting instead to advise no rate increase. Poizner's justification was that substantial increases in workers' compensation base rates would create additional costs for employers during already perilous economic times.

It is worth noting that the last time the insurance commissioner recommended an increase in workers' compensation base rates was January 2009, at a rate of 5 percent. This was 11 percent lower than the original recommendations of the WCIRB.

Stay tuned for further developments in the area of workers' compensation defense law  ...

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