California Insurance Commissioner Dave Jones “declared” that California Employer’s rates should go down in 2016.
Well, his decision does not mean all rates will actually decrease, the reduction is an average of all rate changes. The rates an employer will pay may vary, so this broad announcement is more of a public relation statement than fact.
Also, Commissioner Jones’ decision is only advisory.
You may read a summary of his recent announcement published by the Workers’ Comp Executive stating the average rate saving would be about 5%.
California is a competitive insurance market where each insurance company establishes and uses their own rates. Rates are determined by the insurance companies’ cost of employer’s claims, the typical expenses of doing business and their appetite for the industry they wish to insure. As a result, many times an employer may receive a range of rate offerings from various insurance companies when their policies come up for renewal.
So, what does this all really mean?
- All insurance companies have yet to establish their 2016 rates
- The few insurance companies who have indicated they will offer higher rate discounts than the Commissioner proposed in 2016, have yet to demonstrate them through renewal quote proposals
- Each employer will continue to be judged upon their own claims history, their location, wages paid to employees and other criteria
- Some industries continue to have increasing workers’ comp costs and those employers should expect higher rates
- Employers who are considered “good” risks (i.e. few claims, higher than average paid employees, provide group medical plans, etc.) could receive lower rates compared to 2015
One would conclude that little has changed. Despite the “PR Hype” those employers who continue to control their workplace injury costs will be financially better off than those who have chosen to focus on other priorities.
Whatever your business situation may be, do not wait until a week or two before your policy renews to get involved in your renewal process. Your insurance advisor should be working a couple months in advance to help you determine how the insurance market place will consider your business. This will allow to plan and not be surprised by an unexpected additional expense.
This is your money, so be involved.
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