Just after last month’s issue of Business Briefs was published, the State Compensation Insurance Fund announced that it would be boosting its workers’ comp rates effective April 1. The announcement advises that insured employers will be paying, based upon the overall average, about 9% more under the modifications. Some employers however will be hit harder than others as State Fund is boosting tier A and B by 5%, dropping the 6% group discounts and increasing territorial surcharges in southern California 6.5% for Los Angeles and 4.8 for the rest of the area.
That means that effectively, a tier A or B account which is currently in a group and located in Los Angeles could see an increase of 17.5% [6% for the group, 6.5% LA territory, and 5% for the tier]. Accounts in Los Angeles not in a group will see increases of 11.5%.
State Fund, California’s market of last resort, is also increasing its requirements for schedule credits and debits to $25,000 and increasing minimum premiums by 25%.
Reactions from the brokerage community have been very strong, objecting to the increasing burden and negative factors affecting workers’ comp brokers as well as their business clients.
How will it affect your business, if you are a State Fund client? Well, if you don’t have too many employees relative to your size (as measured by annual revenues), it may not be a major cost factor for you. But for most State Fund clients, it appears as though there may be a major increase soon.
Since the new rates will not go into effect for a few months, now is the time to call your insurance broker for expert guidance in determining the impact on your business, and whether there are any reasonable actions you might be able to take to minimize the cost increase impact on your bottom line.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
Leave a Reply