State Fund Drops a Rate Bomb – 15%

The following is an E-Mail from State Fund directly to our office:

May 29, 2009

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PARK FAMILY INS & FINANCIAL SVCS INC

Dear Broker:

State Compensation Insurance Fund today announced it has filed an increase of 15 percent in collectible premium. The revised rates will apply to new and renewal workers’ compensation policies effective on or after July 1, 2009 and is an average across all classifications. While the rates for some classifications will undoubtedly increase, many will be lower than the average.

The primary driver for the rate increase is medical inflation. The latest reports from the Workers’ Compensation Rating Bureau show that medical treatment costs have increased 16 percent annually since 2005. As a result, State Fund is increasing its rates to account for the rising costs.

State Fund takes a conservative, long-term approach to pricing.  It is important to remember that State Fund premium levels have fallen significantly since 2003, when Governor Schwarzenegger implemented policy reforms that lowered premiums, and even after this increase will still be 46 percent below pre-reform levels.

Because we are a vital provider of workers’ compensation insurance in California, State Fund is committed to maintaining its financial strength and open door policy of serving California’s small and large businesses across all industries.  State Fund continues to offer merit rating, claims-free credit, group and premium discounts to underwrite individual accounts.

We are still the one carrier that can meet all the needs of your book of business and provide you with high caliber safety and claims programs to help you serve your clients.

Regards,   

Lauren Mayfield

Lauren Mayfield

Senior Vice President of Marketing