[caption id="attachment_62187" align="alignright" width="379"] (Clockwise from top left) Mark Stokes, Lynn Wallace, Bill Merget, Mike Ryan and David Weinstein[/caption]
Gov. Jerry Brown recently signed a bill that aims to control increasingly higher costs on workers' compensation premiums, but that won't stop a roughly 15 percent to 30 percent rate hike for employers in the immediate future, according to insurance brokers in the North Bay.
Although many view the reforms in Senate Bill 863 positively, the cost-saving measures won't take effect until Jan. 1. And with Oct. 1 being a major renewal date, employers will essentially have to wait and see if the measures bring their costs down.
"The market is just at a point where it's kind of a perfect storm," said Mark Stokes, managing director of Wells Fargo Insurance Services in Petaluma. Employers in certain sectors such as construction could be hit particularly hard. "It won't be a surprise to see some of them double. They're all just going to get hammered."
After Gov. Brown signed the reform bill, which aims to lower costs for employers while raising benefits for injured workers, the early response from carriers seemed to be skeptical at best.
Liberty Mutual, by most accounts a solid bellwether among carriers, filed for a 21 percent rate increase for eight of its California companies with the Workers Compensation Insurance Rating Bureau of California just three days after the reform bill was signed. Some experts think that signals the reforms would do little to stem rate hikes that have steadily plagued employers the past few years.
But the rating bureau itself altered its previous rate increase suggestion of 12.6 percent, first to 9.2 percent then to zero over average filed rates of $2.38 per $100 of payroll. That would equal a 1.2 percent decrease over the 8.6 percent advisory premium rate approved by Insurance Commissioner Dave Jones in May.
The pure premium rates are advisory and carriers are largely free to set rates.
Still, brokers said carriers can no longer underwrite policies at rates that were kept artificially low throughout the recession. In 2011 carriers paid out $1.26 on every $1 of premiums, according to the rating bureau.