The political grandstanding that is typical this time of year when the California Workers' Compensation Insurance Rating Bureau publishes is pure premium rate request should be boisterous.
The WCIRB's Governing Committee yesterday voted unanimously to approve a 2014 advisory pure premium rate of $2.70 per $100 of payroll. This is 3% more than the $2.62 rate the committee approved in August and is 6.9% higher than the average insurer filed rate of $2.53. And even then rates may be inadequate to cover loss developments according to members. The combined ratio remains well north of 100%. Much of the uncertainty stems from the pending conversion to the Resource Based Relative Value Scale for physician reimbursement. Estimates on the impact of the conversion range from no impact to an increase of up to several hundred million dollars. The reason for the vagueness is that there are codes in the current system that have not yet been "cross talked" to the RVRBS. Adding to the complexity is that for unknown reasons claim frequency has been climbing. Increased frequency and medical loss-cost development that was observed in data collected through the end of June accounts for more than two-thirds of the proposed rate increase. (About 2% of the increase for 2014 is attributed to higher permanent disability benefits.) Some suspect this is due to resolution of complex older claims that had been languishing because of Medicare set-aside requirements as well as the nature of the injuries. Since... |
