Guess what happens when insurance companies lose money? You know the answer, they increase premiums. Workers Compensation carriers are going into their 4^th consecutive unprofitable year.  The average insurer is spending $1.25 for every dollar of premium received. Expect substantial premium increases in California Workers Compensation ahead.

Potential negative underwriting and pricing actions are concerning enough by themselves. But they are only half of the picture. Just as important is the Experience Modification Factor, which can dramatically increase the actual premium paid. When carrier loss ratios are in the unprofitable range, it is obvious that many employers will also have poor loss histories as compared to their premiums paid.  This will push their modifier higher. That modifier sticks with you for several years, penalizing you for your prior losses.

This is an example of what a change of Experience Modifier and Underwriter pricing can have on your policy, even if the base rate is not changed.

What factors are driving the poor results? 

-Average costs of an indemnity claim have risen 35% from 2003 ($61,664 vs. $45,642)

-Average Medical costs have increased 63% since 2003 ($42,613 vs. $26,108)

What can you do?

1. Actively work to prevent injury and illness in your workforce with a joint safety/wellness program. Obesity, smoking and diabetes dramatically increase the costs of work comp claims.

2. Demand consistent, aggressive claims management practices. If there is an open claim you should know why, and what steps are being taken to close it.