Unfazed by last month's rejection of its recommendation to increase the workers' comp claims cost benchmark, the Workers' Compensation Insurance Rating Bureau is going to come back with a recommendation for a 22.8% boost for policies incepting or renewing on or after January 1, 2010 -- a difference of just a point from its mid-year filing. The decision was approved this morning by the bureau's governing committee.

The bureau is using largely the same methodology as before, but it did heed California Department of Insurance's actuaries in taking into consideration the current economic realities -- that employment is down all across the state. This change lowered the overall recommendation by four points.

"If we had done everything the same as in the July 1 filing, the 23 would be like a 27," Dave Bellusci, the bureau's chief actuary, told the committee. He noted that if the bureau had adopted the methodology that the department's actuaries used in their recommended decision, the total increase would have been 17% to 18%, "so about a 5 point difference."

The recommendation passed the governing committee, but it did so without the support of any public members. After yesterday's appointment of two new labor representatives, the bureau's governing committee has its full contingent of public representatives -- two for labor and two for employers -- and all four voted against the recommendation. Each carrier representative, however, voted in support of the increase.

The recommendation includes 17 points for carriers' loss experience 5.8 points for the expected impact of the Almaraz, Guzman and Ogilvie cases and 1 point for experience rating plan off-balance factor. The calculation does include a 2 point reduction from loss adjustment expenses.

With the bureau's past recommendation being rejected in its entirety, it's expected that this recommendation will be put under the microscope.

"Last month, Commissioner Poizner rejected WCIRB's request to increase the Cost Claims Benchmark, in part because he found that insurers were inefficient and, instead of striving to control medical costs, were attempting to pass unnecessary costs along to employers in the form of rate increases," a CDI spokesman told Workers' Comp Executive. "The Commissioner found that insurers were not fully using their statutory tools to control costs and that they must strive to be as efficient as their self-insured counterparts. In light of these findings, he will closely scrutinize this new WCIRB filing for evidence that the changes he required are being made."

Look for additional coverage of the bureau's decision and how it was made in the next premium edition of Workers' Comp Executive.

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