Hard Market News Blasts
The Workers’ Compensation wind has definitely changed direction in California. Here are a few headlines that have been seen lately and the short (and I mean very short) outlines by the Blogger:
Experience Rating Plan Changes to Hit Ex Mods
Starting January of 2013, the WCIRB is changing the weighted values on claims to make them more punitive to those who have them. They also announced a plan to go into effect in 2014 that will have modification impacts on small businesses that are just over the premium threshold for a modification that will push 18% more businesses over the 100% modification baseline. In effect, they are raising the punitive costs of claims. After finally taking the lid off the calculation a few years back, the changes are coming fast and furious to make sure that there is enough premium in the system to cover claims cost. You should contact me to see how we can help manage that modification over the long haul so that this will have a zero net effect on your firm.
WCIRB Suggests Increased Rates for 2013
Even though we have had two substantial rate increases over the past 6 months (36% on 1/1/12 and another double digit increase on 7-1-12), the WCIRB still sees claims cost rising and suggested rates inadequacy to cover these claims. They have suggested a 12% increase in rates across the board for January. This, accompanied with calculation change caused experience modification increases is, in effect, a double whammy for California employers. You should contact me to see how we can help manage that modification over the long haul so that this rate increase can be offset by modification savings.
Seabright Sold! Sold for 83% of Statutory Surplus.
Seabright Holdings, Inc., Owner of Seabright Insurance Company, a scrappy little company that jumped into the California market with both feet, has been sold for less than the presumed value of its surplus. This causes one to wonder about the credibility of the actual value of its surplus based on current reserve levels. The fact that the buyer, Enstar, is taking the Seabright name and attaching it to one of their existing carriers and selling off the actual Seabright book of business and renewals, leads me to believe that the value of the surplus based on current reserve levels is nowhere near correct, and that this move may have been to stave off investigation into those reserve levels. Lawsuits to follow, I am sure. This, along with Ulico Casualty severely curtailing writings, leaves fewer players in the market and will have an effect on the hardening that we are seeing in the market as a whole.
Hate to be the bearer of bad news, but none of this is good for California employers, increased mods, increased rates, and reduction in the size of the available market, is a recipe for a hardening market with future increases on the Horizon. Protect your company from these changes by contacting me at firstname.lastname@example.org .