
NY Assemblyman Co-Sponsors Stretch Limousine Safety Act
The bill would put more strict laws and regulations in place regarding inspection and operation.
NORTH BAY — The Workers’ Compensation Insurance Rating Bureau, the body that oversees and makes recommendations for the workers comp sector, has officially recommended a 1.8% decrease in pure premium rates beginning in 2012.
Although a decrease may sound like good news for insurers and employers — especially compared to a suggested 40% increase in rates by the bureau earlier this year — the North Bay’s largest insurance agency is warning that the minus 1.8% suggestion could have the opposite effect, leading to an average increase of 36%.
That’s according to Mark Stokes, regional managing director at Wells Fargo Insurance Services in the North Bay, the largest agency in the area with $195 million in 2010 premium volume. “There’s a tremendous amount of misinformation about workers comp right now,” he said.
The bureau has not provided a year-over-year comparison of its previous filings with the proposed 2012 rate filing, according to The Workers' Comp Executive, a leading trade publication.
Without that comparison, it’s difficult to fully gauge the impact of any rate filing, Stokes said. His point, and Wells Fargo’s assessment of the minus1.8% rate proposal, was echoed by The Workers Comp Executive. “Semantics aside, however, the end result is largely the same – a 40% increase,” the trade journal wrote recently.
The pure rate table contained in each year’s rate filing is the baseline that insurers use to set base rates. Stokes said the bureau should compare its proposed pure rate table in its 2012 filing with the current approved 2011 pure rate table.
Using that metric, Stokes said, Wells Fargo found the average difference was an increase of 36%. An extreme example that Wells Fargo found was with vineyards, which would see its pure premium rate change from 3.06% to 4.48% – an increase of 46.4%. Similarly, a typical restaurant’s pure premium rate would go from 2.69% to 3.65% — an increase of 35.7%, according to previous Wells Fargo rates. “We’re talking about a sizable workers comp increase in 2012,” he said.
The pure premium recommendation is only advisory, and many insurers have filed for and received approval for rate increases in the recent past. The actual pure rate is what insurers use to file base rates, Stokes said.
The bureau recommended rate increases of 24.4% in 2009, 22.8% in 2010, and 20.4% for 2011. The Department of Insurance agreed to a 5% increase in 2009 but didn’t allow any increase in 2010 and 2011.
The diverging interpretations stem from the bureau’s use of a new metric in calculating its recommendations. But it’s a big change from the 40% recommendation that was made earlier this year, and as such is a controversial issue, according to Stokes and The Workers Comp Executive.
The minus 1.8% rate recommendation would apply to all renewals in January 2012. “And sticker shock in workers comp is possible for 2012,” Stokes said.
Source: North Bay Business Journal
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