According to Dave Jones, the California insurance commissioner, the top 100 companies in the state, which make up 96.7 percent of its market, have increased the rates that they have filed by an 2.8 percent average so far this year.
The average increase will impact the majority of businesses that are legally required to purchase plans that pay for an injured employee’s medical expenses when the injury occurred while on the job, and that offers compensation for work related disabilities both temporary and permanent. The majority of the policies held by employers renew in the first month of the year.
What makes 2012 different is that it is the beginning of a new system which was developed by regulators to act as a benchmark for insurers who file advisory rates with the Department of Insurance. While insurance companies do frequently volunteer to maintain rates that are near that of the benchmark, they do not require the commissioner’s approval for their rates.
According to an Association of California Insurance Companies spokesperson, Nicole Mahrt, “The new changes are positive because they enable policymakers and policyholders to better understand the true costs in the system.”
Though there has been a steady rise in California insurance claim losses since they struck their low point in 2006, they remain approximately 25 percent lower than they were when they reached their highest levels in 1999.
The State Compensation Insurance fund, which is government operated and is the biggest workers’ compensation company in the state, will be maintaining its rates this year. This insurer has approximately 15 percent of the control of the market in the state and provides small employers with a last resort option for insurance.