California work comp combined ratio increases
SAN FRANCISCO—California workers compensation insurers’ combined ratios climbed during 2009 to the highest level since 2001, while average claims costs continued increasing, according to a quarterly report on insurer experience released Thursday. OAS_RICH(”Middle”);
The ultimate accident-year 2009 combined ratio is estimated to have reached 124%, the San Francisco-based Workers’ Compensation Insurance Rating Bureau of California said in its “Summary of March 31, 2010 Experience.” That is 14 percentage points higher than for 2008 and the highest level since 2001, when it declined to 143% from 184% in 1999.
The WCIRB also projected an ultimate accident-year loss ratio of 80% for 2009, which is about 9 percentage points above 2008 and the highest accident-year loss ratio since 2002.
The calendar-year combined ratio for 2009 is 116%, which is 15 percentage points higher than for 2008, the WCIRB said.
The WCIRB estimated that the average cost, or severity, of a 2009 indemnity claim will reach $60,000, a 5% increase over 2008. That comes after three years of severity increasing at about 15% per year.
Meanwhile, average statewide insurer rate per $100 of payroll for policies written in 2010 is $2.47, or 5% above the average rate charged for 2009.
The WCIRB’s report can be found online at https://wcirbonline.org/WCIRB/wcirb_wire/2010/2010_10.html.
Dog bite claims
Dog bite claims cost the insurance industry $412 million in 2009, an increase of 6.4 percent from 2008.
Dog bites account for more than one-third of all homeowners insurance liability claims paid out in 2009, says the Insurance Information Institute (I.I.I.).
An analysis of homeowners insurance data by the I.I.I. found that the average cost of dog bite claims was $24,840 in 2009, up slightly from $24,461 in 2008.
Over the six-year period since 2003, the cost of these claims has risen nearly 30 percent. Additionally, the number of claims increased by 4.8 percent to 16,586 in 2009 from 15,823 in 2008.
“The rise in dog bite claims over the last seven years (2003-2009) can be attributed to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, which have risen well above the rate of inflation in recent years,” said Loretta Worters, vice president at the I.I.I.
With more than 50 percent of bites occurring on the dog owner’s property, the issue is a major source of concern for insurers.
More than 4.7 million people in the United States are bitten by dogs annually, and nearly 900,000 of those, half of them children, require medical care, according to the Centers for Disease Control and Prevention (CDC). Of those injured, 386,000 require treatment in an emergency department and about 16 die.
The rate of dog bite related injuries is highest for children aged five to nine years old; the rate decreases thereafter. Almost two-thirds of these injuries among children ages four years and younger are to the head or neck region. Injury rates in children are significantly higher for boys than for girls.
Dog Owner Liability
There are three kinds of law that impose liability on owners:
1. Dog-bite statute: The dog owner is automatically liable for any injury or property damage the dog causes, even without provocation.
2. “One-bite” rule: In some states, the owner is not held liable for the first bite the dog inflicts. Once an animal has demonstrated vicious behavior, such as biting or otherwise displaying a “vicious propensity,” the owner can be held liable. Some states have moved away from the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone.
3. Negligence laws: The dog owner is liable if the injury occurred because he or she was unreasonably careless (negligent) in controlling the dog.
In most states, dog owners are not liable for losses incurred by trespassers who are injured by a dog. A dog owner who is legally responsible for an injury to a person or property may be responsible for reimbursing the injured person for medical bills, lost wages, pain and suffering and property damage.
Read more: http://www.insurancejournal.com/news/national/2010/08/18/112569.htm#ixzz0×48NotHx
30% workers comp rate increase proposed for California
SAN FRANCISCO—Actuaries for the San Francisco-based Workers’ Compensation Insurance Rating Bureau of California have recommended a roughly 30% rate increase for policies incepting Jan. 1.
The recommendation Wednesday by the WCIRB’s actuarial committee must be approved by the governing committee before it goes to the California Department of Insurance for approval or disapproval. OAS_RICH(”Middle”);
WCIRB’s governing committee is scheduled to meet Aug. 11 to vote on the matter, a spokesman said.
Increasing medical costs and the Department of Insurance’s past rejections of rate increases resulted in the need for an approximately 30% increase, the spokesman added.
Last year the Department of Insurance rejected the WCIRB’s call for a workers comp insurance rate increase of nearly 24%.
WCIRB GOVERNING COMMITTEE RECOMMENDS AN APPROXIMATE 29.6% INCREASE IN PURE PREMIUM RATES EFFECTIVE JANUARY 1, 2011
- Earlier today, the WCIRB Governing Committee directed the WCIRB to submit a filing to the California Department of Insurance (CDI) recommending among other things an approximate 29.6% increase in pure premium rates (or “claims cost benchmark”) effective January 1, 2011. The Governing Committee made its decision based on a recommendation made by the WCIRB Actuarial Committee at its August 4, 2010 meeting.
San Francisco, CA August 11, 2010
Pure premium rates reflect the loss (both medical and indemnity) and loss adjustment expense expected to occur on policies with effective dates on or after January 1, 2011. Pure premium rates are a benchmark that insurers may use as a tool for determining their own rates. Pure premium rates have not been increased since January 1, 2009, and this is the third increase in excess of 20% filed by the WCIRB since then. If the full 29.6% increase is approved by the Insurance Commissioner, the January 1, 2011 pure premium rates will still be, on average, 53% lower than the approved pure premium rates in effect January 1, 2004.
The WCIRB expects to submit its pure premium rate filing to the CDI on or around August 17, 2010. Once the filing is submitted, it may be viewed or downloaded from the Regulatory Filings section of the WCIRB website
Calif. State Fund Previews 2010 Workers’ Comp Changes
January 19, 2010
Each year brings new laws and regulations for employers, and 2010 is no exception. To help employers stay informed about regulations and issues impacting workers’ compensation insurance, the California State Compensation Insurance Fund has provided a preview of some of the potential changes on the horizon.
SB 313 – Penalties for failure to provide workers’ compensation coverage
Summary: This bill increases the potential penalty assessment imposed upon employers based on periods in which they had been unlawfully uninsured for workers’ compensation. Employers without insurance would be liable for the greater of twice what their premium per employee would have been, or per-employee penalties of $1500, up from $1000.
Why: Employer fraud is a major problem in the workers’ compensation system, with dishonest employers seeking to avoid paying premiums. The Department of Industrial Relations has indicated that 12 percent of California employers are uninsured, which contributes to increased workers’ comp costs for everyone.
AB 483 – Requires website to verify workers’ comp coverage
Summary: This bill requires that the Workers’ Compensation Insurance Rating Bureau (WCIRB) establish a Web site to help determine whether an employer is insured for workers’ compensation. Many other states have sites for online proof of coverage. The new workers comp verification site would augment California’s database for contractor licensing (www.cslb.ca.gov/).
Why: Public access to the coverage information will discourage employers from operating without coverage. A major UC Berkeley study conducted for the California Commission on Health, Safety and Workers’ Compensation (CHSWC) shows that California employers may be under-reporting payroll by as much as 23 percent on average, with high risk occupations such as construction extremely affected by fraud. This translates to billions of dollars in payroll, and contributes to honest employers paying higher premiums.
Changes to the California Experience Rating Plan Modification Formula
Summary: Insurance Commissioner Steve Poizner recently approved revisions to the formula for calculating experience modifications (ex-mods). The changes will not affect the ratings of all employers in the same way. The degree of change for an individual employer based on the revised formula will largely be determined by the number and size of losses and the employer’s payroll. Most employers will experience a change of a few percentage points under the new methodology.
Why: At the request of Commissioner Poizner, the WCIRB formed a task force to examine the ex-mod formula in 2007. The group set out to enhance the ex-mod’s predictive value and make it easier to understand, so that employers would more strongly perceive their ex-mod rating as an incentive to manage a safe workplace. For more details, visit http://www.scif.com/news/122909-ExperienceRatingChanges.html.
New Labor Enforcement and Compliance (LEC) Surcharge on 2010 Policies
Summary: This surcharge will fund activities of the Division of Labor Standards Enforcement (DLSE), an agency that works to ensure compliance with wage and hour standards. The LEC surcharge will assess premium at a rate of 0.1924 percent for all California workers’ compensation policies incepting on or after January 1, 2010.
Why: In implementing the LEC surcharge, the Department of Industrial Relations is continuing its move toward user funding of certain institutions, including Cal/OSHA and the Workers’ Compensation Appeals Board. As a result, the LEC surcharge will be taking its place alongside the six existing surcharges on premium bills:
Workers’ Compensation Administration Revolving Fund (WCA)
Workers’ Compensation Fraud Assessment (WCFA)
Uninsured Employers Benefits Trust Fund (UEBTF)
Subsequent Injuries Benefits Trust Fund (SIBTF)
California Insurance Guarantee Association (CIGA)
Occupational Safety and Health Fund (OSHF)
Source: SCIF
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