How Your Agency Can Profit From the Current State of California’s Workers' Compensation Marketplace

Past Workers' Comp insurance cycles have always created tremendous opportunities for informed and prepared agencies, and this one is no exception.

The Workers' Compensation market in California is hardening, with the State Fund taking overall rate increases, some classes as much as 17.5% and territories up to 11.5%.

  • Barrett had to borrow money to cover its reserve deficiencies.
  • Companion’s reported problems reporting accurate claims and payroll data might delay X-mod calculations.
  • WCIRB reports that indemnity claim frequency has continued to increase in California unlike in most other states and that cumulative injury claims are estimated to have increased by 62% since the 2005 to 2007 period.
  • The CDI has advised an average 6.7% increase in pure premium rates over those in effect last July, observing that medical and indemnity losses are outpacing wage growth and consequently, the average advisory pure premium will increase in 2015.

Professional agents harness these swings to win and retain more customers through acting as their trusted advisors.

Since the purchase of Workers' Compensation coverage transfers the cost and risk of employee injuries to the carrier, selecting the right carrier is critical. Because execution of services by carriers will greatly affect larger policyholders’ exmods as well as base rates by class and the propensity to use IRPM credits and debits to achieve an underwriting profit, placing coverage with a poorly managed carrier is indeed risky business. Wharton produced a good general paper dealing with the risk of insurance. You can read the report here: http://fic.wharton.upenn.edu/fic/papers/96/9616.pdf For any Workers' Compensation customer, variation in the exmod and the IRPM credit/debit historically is greater than swings in filed rates. Therefore astute agents win and retain customers through a quality best practice of advising which carriers have a good track history of keeping exmods down as well as minimizing indemnity creep and reducing medical cost drivers.

Author: UVIS — Published: Wednesday, June 3, 2015

Posted In: Agency Strategies

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