Monday, April 23, 2012

Anybody Notice a Work Comp Increase?

If you haven't yet, you will. The Insurance industry as a whole took it on the chin last year. Rates have been at all time lows over the last several years, then 2011's storms blew through and smacked the industry. Carriers are telling us that they need to take rate increases this year.
Workers' Compensation insurance has always been a loser for insurance companies.  Twisted knees and bent backs result in 5-6 figure payouts.  Carriers will be increasing their rates and tightening up their appetites in 2012.

A Work Comp rate is developed by the State's Loss Cost Factor multiplied an insurance company's Loss Cost Multiplier.  Put simply, the state issues base rates for each Work Comp class code.  The insurance company then loads that rate with their own factor to develop the final rate.  Here's an example:

The VA loss cost factor for Drywall work is 3.29.

One of my carriers' Loss Cost Multiplier is 1.101. 

Multiplied together, we get a final WC rate of 3.62 for a Drywall contractor.  This is the rate multiplied per $100 of payroll to develop this contractor's Workers' Compensation premium.

On 4/1/12, Virginia Loss Cost Factors incrased by an average of 11%.  Some classes took decreases, but most took increases of varying percentages.

My Drywall contractor's rate went up by 16.67% this year on the VA base rate alone.  I'm meeting with him later today to present his renewal quote.  It will not be a pleasant conversation.

For a good comparison of VA's Loss Cost Factors for this year vs last year, click here.  This information is provided by Mid-Atlantic Insurance Services, a Work Comp wholesale broker based in Richmond, VA.

Did your Work Comp increase this year?  Let me know about it.

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