[caption id="attachment_53123" align="alignright" width="342"] Mark Stokes, David Weinstien[/caption]
NORTH BAY -- Employers will likely face an increase in their workers compensation premiums in the coming year, as the cost of medical utilization and permanent disability continues to rise, according to brokers.
The Workers Compensation Insurance Rating Bureau, which makes recommendations on rates for carriers, has proposed a mid-year increase in pure premium rates of 4.1 percent, which would increase average premium costs from $2.41 per $100 of payroll to $2.51 per $100. The recommendation goes to Insurance Commissioner Dave Jones' office, who may or may not approve the increase; however, carriers are free to set their own rates, and brokers said they expected an increase to be passed onto employers.
"There's no question there's upward pressure," said Doug Dilley, a partner with Santa Rosa-based George Petersen Insurance Agency. "I fully expect we'll see carriers file for a mid-year increase."
Mark Stokes, regional managing director at Wells Fargo Insurance Services in the North Bay, agreed that carriers are likely to raise rates because of medical costs and an increase in permanent disability claims.
"What (the bureau) is saying is they need an increase of 4.1 percent. That's still sizable," he said. "If you look at what has transpired, the average renewal rate we've seen -- if an (experience modification factor) is static -- is an increase between 8 and 15 percent."
The request by the Rating Bureau, if approved, would kick in July 1. But even if Commissioner Jones doesn't sign off on it, the suggested increase could very well be a bellwether of how carriers are reacting to adverse conditions in the market.
"It doesn't prevent carriers from adjusting rates, it's the advisory rates," Mr. Stokes said. "What will happen in January 2013, you're likely going to see a pure premium rate increase in the high teens. The increase could range between between 10 and 20 percent, he said.
Mr. Dilley agreed with that notion.