State Declares Average Rate Increase for Worker's Compensation

December 10, 2009

Sacramento - State Insurance Commissioner Steve Poizner has announced that the average rate hike for worker’s compensation starting January 1 will only be 4.1% and will be relatively stable in 2010.

The actual increase is far from the 22.8% increase that the Worker’s Compensation Insurance Rating Bureau of California requested for the claims cost benchmark.

Poizner claims this is great news for small business owners in California and that it proves that rejecting the double-digit increase last month was the best move.

That was the second consecutive request for an increase of more than 20% to be rejected by the commissioner.

He added that it is unfair for insurance companies to increase their rates as a result of their own inefficiency especially during this recession where employers are struggling.

Poizner said that 59 out of the top 100 insurance companies, which write 97% of all workers’ compensation policies, have requested rate increases to the Department of Insurance.

Of those, 4 filed rate decreases ranging 1% to 8.4%, 13 filed for no overall change, and 42 filed rate increases of 0.6% to 12%.

The average of all rate increases is 4.1% and the average weighted by the market is 4%.

Pozner also said that these data shows that when forced, insurance companies find ways to reduce costs and minimize rate changes by utilizing tools already available to them.