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We've got good news and bad news on workers' comp rates.

First the good news: Your rates will probably not go up next year.

Ready for the bad news? After 2009 they could jump almost 20 percent.

The state's non-partisan Workers' Compensation Insurance Rating Bureau (WCIRB) made a recommendation last month to the Department of Insurance to increase workers' compensation insurance rates by at least 16 percent.

Why the big increase? The price-cutting effects of recent legislative reforms in the state may have bottomed out. And, medical-cost inflation continues to rise while the frequency of claims, which had been declining, has flattened.

The increase breaks down like this:

  • 10.8 percent is due to increased medical costs.
  • 2.8 percent is attributed to increased loss-adjustment expenses.
  • 1.8 percent is from other factors.

Where's the remaining 4 percent? If proposed changes to the permanent disability rating schedule are adopted by the state, pure premium rates could jump another 3.7 percent, for a total increase of nearly 20 percent. That 3.7 percent increase would affect "the unexpired portion" of workers' compensation policies purchased in 2008 that extend into 2009.

When can you expect a bigger bill in the mail? Due to competition amongst the many carriers we represent, business owners with a clean claim history will probably not experience a significant price hike next year and the Department of Insurance is unlikely to force carriers to adopt such a high rate increase.

But, with medical and disability costs on the rise, it will be tough for insurance carriers to maintain their current pricing structure for the legitimate workers' compensation claims. So expect a price hike after 2009.

What's a savvy insurance buyer to do? Have us look at your policy and shop for some great rates among our carriers now, before rates go up. Call us at (818) 508-9925 or (661) 902-0360.