On November 30, 2012, California Insurance Commissioner Dave
Jones approved new workers’ compensation insurance advisory pure premium rates
for policies that renew January 1, 2013 or later. This decision will likely mean a substantial
increase in the price employers pay for workers’ compensation insurance
compared to what they paid last year for identical coverage.
Keep in mind that pure premium rates are not necessarily
what a carrier will charge a policyholder on January 1st. A pure premium rate is simply the amount the
Workers’ Compensation Insurance Rating Bureau of California (WCIRB) expects
carriers’ to pay for claims, losses and loss adjustment expense based on the
kind of work a person does. Pure premium
rates do not contemplate the other things insurance companies need to pay, like
salaries to underwriters, commissions to brokers or dividends to shareholders.
Because of this, it is important to consider how these approved
rates could affect the price policyholders pay for coverage. So, WorkCompare.com has compared the pure
premium rates in force January 1, 2012 to the rates approved for January 1,
2013 and found the following:
·
Out of the 490+ standard classifications, 57
rates are DECREASING and 433 rates are INCREASING
·
Average pure premium rate in force January 1,
2012 was 6.34
·
Average pure premium rate approved for January
1, 2013 was 7.34
·
That equals an average pure premium rate
increase of 15.77% (Average rate calculation does not include per capita or per
race rates: 7707 – Firefighters –
volunteers; 7722 – Police, Sheriffs – volunteers; or 8278 – Jockeys)
What can business
owners expect now that new 2013 rates have been approved?
Not all rates will change uniformly, and knowing how much a
policyholder’s rates are changing could be valuable information to share with
your client. Consider these examples:
If your client specializes in van conversion (governing
class of 8390 – Automobile Van Conversion or Customizing) with a policy that
renews on January 1st, they may be facing a 42.61% pure premium rate increase.
At the same time, if your client renewing on January 1st owns
an equipment rental yard (governing class of 8028 – Equipment or Machinery
Rental Yards), they may see a -13.40% pure premium rate decrease.
Whenever new rates are proposed or approved, WorkCompare.com
publishes a list that shows how much the individual rates are changing. The sample data below illustrates the
differences between the pure premium rates in force January 1, 2012 to the
rates approved for January 1, 2013:
|
Class – Description
|
WCIRB Approved
Pure Premium Rates
Eff 1-1-2012
|
WCIRB Approved
Pure Premium Rates
Eff 1-1-2013
|
% Change
|
|
8028 – Equipment or Machinery Rental Yards
|
8.21
|
7.11
|
-13.40%
|
|
8807 – Newspaper, Magazine or Book Publishing - no
Printing - editing
|
0.85
|
0.74
|
-12.94%
|
|
7421 – Aircraft Operation - personnel transport
|
1.68
|
1.48
|
-11.90%
|
|
3719 – Oil or Gas Refining Units - erection
|
2.61
|
2.31
|
-11.49%
|
|
4922 – Magnetic Tape Mfg.
|
2.77
|
2.65
|
-4.33%
|
|
3507 – Machinery or Equipment Mfg.
|
6.73
|
6.53
|
-2.97%
|
|
7403 – Aircraft Operation - scheduled, commuter and
supplemental - all others
|
9.89
|
9.86
|
-0.30%
|
|
3175 – Furnace, Heater or Radiator Mfg.
|
7.37
|
7.54
|
2.31%
|
|
8062 – Stores - computer - wholesale or retail
|
2.07
|
2.14
|
3.38%
|
|
5108 – Door installation - overhead doors
|
12.02
|
12.56
|
4.49%
|
|
5059 – Iron or Steel Erection - under 3 stories
|
20.3
|
21.26
|
4.73%
|
|
2840 – Picture Frame Assembly
|
7.78
|
8.16
|
4.88%
|
|
4312 – Newspaper Delivery
|
5.71
|
6.04
|
5.78%
|
|
2014 – Grain or Rice Milling
|
8.29
|
8.86
|
6.88%
|
|
5028 – Masonry
|
6.51
|
7.08
|
8.76%
|
|
8350 – Gasoline or Oil Dealers - wholesale
|
7
|
7.69
|
9.86%
|
|
8267 – Machinery and Equipment Dealers - secondhand
|
8.15
|
8.98
|
10.18%
|
|
8831 – Hospitals - veterinary
|
3.25
|
3.59
|
10.46%
|
|
5470 – Glaziers
|
7.19
|
8.02
|
11.54%
|
|
5632 – Steel Framing - light gauge - commercial
|
15.36
|
17.34
|
12.89%
|
|
4499 – Plastics - thermoformed products Mfg. - N.O.C.
|
5.78
|
6.61
|
14.36%
|
|
4114 – Glassware Mfg.
|
10.25
|
12.12
|
18.24%
|
|
6315 – Water Mains or Connections Construction
|
8.79
|
10.65
|
21.16%
|
|
7429 – Airport Operators
|
6.15
|
7.52
|
22.28%
|
|
4351 – Photo Engraving
|
2.61
|
3.35
|
28.35%
|
|
9424 – Garbage, Ashes or Refuse Dump Operations
|
8.16
|
10.5
|
28.68%
|
|
9009 – Building Operation - commercial properties
|
3.83
|
4.93
|
28.72%
|
|
4295 – Printing - screen printing - all other employees
|
5.48
|
7.54
|
37.59%
|
|
8390 – Automobile Van Conversion or Customizing
|
5.28
|
7.53
|
42.61%
|
|
8749 – Mortgage Bankers -- All Employees -- Including
Clerical Office Employees And Outside Salespersons
|
0.38
|
0.55
|
44.74%
|
You
can download a complete list of approved rate changes here.
We provide this information because policyholders are
concerned with budgets, specifically the difference between last year’s premium
and the coming year’s renewal pricing. And, we encourage our users to contact
their policyholders and provide the specific details of how their exact rates
are changing, up or down.
A WorkCompare.com pre-quote estimate will help you quickly
analyze and compare pricing for 90+ California admitted workers’ compensation
companies.
Click here
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