WCIRB Recommends 12.6% Increase in WC Insurance Premiums
The California Workers’ Compensation Insurance Rating Bureau is set to recommend a 12.6% increase in workers’ compensation insurance premiums for new and renewing policies as of 2013, raising the average rate from $2.38 per $100 in payroll to $2.68. For context, Arizona’s rate in 2010 was $1.71 per $100 in payroll.
The Insurance Commissioner is often bemoaning the “underground economy” and does not miss many opportunities to champion the arrest, prosecution, and, ultimately, the destruction of the businesses that find it simply unaffordable to purchase workers’ compensation insurance. How can a small business, barely making any money, continue to make payments in the face of increasing insurance costs?
Often enough, small business owners have barely any money to pay themselves, let alone their employees. More insurance increases means (1) fewer jobs; (2) fewer businesses in California; and (3) more business driven into the underground economy, costing California tax revenue and bloating the budget necessary for investigation, prosecution, and enforcement.
At the same time, this is a clear indicator that workers’ compensation expense is going up, even as participants see a decrease in services — workers’ compensation Judges are being overwhelmed with demands on their time, lien claimants are swarming like locusts, and the Medical Unit has so many requests that it fails to follow its own rules in issuing panels. Perhaps reforms are needed now, and lots of them!
As a classmate of your humble blogger once told his fellow visitor to the drunk tank, there on his third DUI, “it doesn’t look good.”
Raising the rates and increasing the carrier’s profits is justified by the increase in payments of the benefits due to cutting costs of litigation by not using lawyers and disputing liability. This is the reason that employers used to self-insure and self-administer! The insurance carriers are the beneficiaries of higher benefits. They have no monetary insentive to reduce benefits ,only to reduce unrecoverable litigation costs.