Bi-Monthly Newsletter

WCIRB to Propose 3.5% Increase in Pure Premium Rates January 1, 2005

The WCIRB will propose a 3.5% average increase in the advisory pure premium rates for policies incepting on or after January 1, 2005, based on an analysis of loss and loss adjustment experience as of March 31, 2004. Most of the proposed 3.5% increase is attributable to the increase in benefits enacted by Assembly Bill No. 749 that become effective on or after January 1, 2005. The WCIRB anticipates filing the proposed January 1, 2005 pure premium rates with the California Department of Insurance next week. The insurance commissioner is expected to schedule a public hearing in mid-September to consider the proposal.

The WCIRB will review and, as appropriate, revise its proposed January 1, 2005 pure premium rates, based on updated accident-year loss experience valued as of June 30, 2004 when it becomes available in early September. In addition, the WCIRB will review the impact of the permanent disability provisions enacted by Senate Bill No. 899 on benefit costs when the Administrative Director adopts a new permanent disability rating schedule. If a new schedule is adopted prior to the close of record, the proposed January 1, 2005 pure premium rates will be revised to reflect the estimated cost impact of the new provisions.

The proposed January 1, 2005 pure premium rates are, on average, 4% below the approved January 1, 2004 pure premium rates, 18% below the approved July 1, 2003 pure premium rates, and 12% below the approved January 1, 2003 pure premium rates. In addition, the proposed January 1, 2005 pure premium rates are 27% below the January 1, 2004 pure premium rates proposed prior to enactment of Assembly Bill No. 227, Senate Bill No. 228 and Senate Bill No. 899.