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FLASH REPORT: WCIRB Recommends 2.9% Decrease in Pure Premium Rates
For January 1, 2004: Carriers Still Skeptical About Savings
SAN FRANCISCO - Before an audience of insurance carriers, medical
providers and the California Department of Insurance, the Workers'
Compensation Insurance Rating Bureau at a rate hearing today, is
amending its proposed advisory pure premium rate increase of July 30.
Based on savings estimates derived from workers' comp reform legislation
enshrined in SB 228 and AB 227, the Bureau recommended a 2.9% decrease
from pure premium rates adopted on July 1. On July 1, the Bureau
recommended a pure premium rate increase of 7.2%. On July 30, the
Bureau recommended a 12% increase on top of the 7.2%. The Bureau's
recommendation negates the 12% increase and cuts into the 7.2%
currently in effect but does not eliminate it. This recommendation
would apply to rates on January 1, 2004.
The Bureau's "conservative" estimate is based on savings estimates
realized from provisions within the workers' comp reform legislation
including but not limited to caps on physical therapy and chiropractic
visits as well as fee schedules for pharmaceuticals. Missing from the
savings considerations were estimates derived from medical treatment
guidelines and anti-fraud efforts, reforms considered essential to the
reduction of pure premium rates by Insurance Commissioner Garamendi.
Carriers are still skeptical about the savings estimates, especially
any estimates that will come from the adoption of new medical
treatment guidelines, since it will be difficult to come up with
accurate savings by the end of the year, given California's unique
experience.
During a press conference conducted by the Commissioner halfway
through the hearing, Commissioner Garamendi supported the
recommendations made by the Bureau but indicated that the hearings
would need to be continued in October, so savings estimates from
medical treatment guidelines and anti-fraud efforts can be taken
into account. The hearing was adjourned to be continued sometime
at the end of October when it's expected that more savings estimates
will be available, giving the insurance industry time to consider
new rates for January 2004 renewals. Governor Gray Davis is expected
to sign the workers' comp legislative package tomorrow afternoon.
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published in each issue. Opinions on financial and legal matters are those
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herein is copyright 2003 Providence Publications, LLC. All Rights Reserved.
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copyright notice; (3) This document may not be distributed for profit.
last updated: September 30, 2003
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