Print Page   |   Contact Us   |   Sign In   |   Register
Search our Site
News & Press: Legislative Issues

WCIRB Issues Proposed Rate Filing For 2021 Policy Year

Thursday, August 13, 2020   (0 Comments)
Share |
The WCIRB (Workers' Compensation Insurance Rating Bureau) Governing Committee voted on August 12, 2020; to propose an overall 2.6% increase in the advisory rates for 2021.
This breaks down as follows:
  1. Without COVID-19 claims, they would have recommended a 1.2% decrease.
  2. The estimate of COVID-19 claims being filed in 2021 added 3.8%, netting out at the 2.6% increase.
  3. The public actuary estimated what would have been a net 1% decrease, but that proposal was outvoted by the insurer members of the Governing Committee, 8-4.
COVID-19 claims bring a difficult problem to the WCIRB:
  1. They don't have any prior claims history of the severity of these claims to make estimates.
  2. They need to provide an estimate of what these claims from 2021 policies will cost.
  3. They can only use claim counts at this point.
  4. The WCIRB is considering using a 3 or 4 tier approach to the 2021 rate filing, taking the 3.8% of COVID-19 claims increases; and adding more to the rates for the higher exposure industries.
What does this mean for construction:
  1. The WCIRB did do an analysis of the first 23,000 COVID-19 workers' compensation claims filed with the Division of Workers' Compensation, through July 23, 2020.
  2. They reviewed the 20 major industry segments in California, and estimated the claims counts per $ Billion of payroll.
  3. It is not surprising that the Health Care Industry has far and away the higher number of claims, more than 4 times the average.
  4. Of the 20 industry segments, Construction was 12th on the list, with claims that are 42% below the average.
  5. Depending on whether there are 3 or 4 tiers, Construction is likely to be tagged in the 2nd or 3rd tier; with rates near or below the average increase of 2.6%.
What is next:
  1. The WCIRB will issue their initial filing with Insurance Commissioner Lara shortly.
  2. The WCIRB will review more of the COVID-19 claims, and whether to utilize the 3 or 4 tiers for an adjustment for COVID-19 claims.
  3. The WCIRB Actuarial Committee will meet on September 8, 2020; and decide on their recommendation to the Governing Committee.
  4. The WCIRB Governing Committee will meet on September 9, 2020; and decide whether or how to amend the filing.
  5. Insurance Commissioner Lara will then schedule a public hearing to review the filing. Bruce Wick will attend this hearing.
  6. Insurance Commissioner Lara will issue a final ruling within 30 days after the hearing.
You can click here for a copy of the Actuarial presentation to the Governing Committee. The industry segmentation is on slide 35. 

Any questions please contact CALPASC Director of Risk Management Bruce Wick, at 760-535-9623, or bwick@calpasc.org.

Association Management Software Powered by YourMembership  ::  Legal