On October 1, 2012, the WCIRB amended its January 1, 2013 Pure Premium Rate Filing, in large part, to reflect the passage of Senate Bill No. 863 (SB 863). The amended filing included a comprehensive evaluation of the cost impact of SB 863 on the losses and loss adjustment expenses underlying 2013 policies.
The WCIRB has now updated its cost evaluation of SB 863 to reflect (a) updated assumptions on lien-related costs based on the results of the WCIRB's recent lien survey, (b) a revision to the evaluation of the changes to permanent disability benefits primarily to more appropriately reflect the cost of life pension benefits on permanent disability claims that will now have ratings over 70%, and (c) a review of all the underlying assumptions for consistency across all the reform components evaluated.
The WCIRB now estimates the net savings of the provisions of SB 863 that can be evaluated at this time on the costs underlying 2013 policies is 4.4%. (The estimated net savings reflected in the evaluation in the WCIRB's October 1, 2012 amended filing submission was 4.9%.)
This updated evaluation of SB 863 does not affect the pure premium rates proposed in the WCIRB's Amended January 1, 2013 Pure Premium Rate Filing, which, on average, were targeted at the industry average filed pure premium rate of $2.38 per $100 of payroll. The updated evaluation does increase the actuarially indicated average pure premium rate based on June 30, 2012 experience and the WCIRB's estimated impact of SB 863 from $2.60 to $2.61 per $100 of payroll.
The WCIRB's updated evaluation of SB 863 can be accessed from the Regulatory Filings section of the WCIRB website or by clicking on the link: Updated WCIRB Evaluation of SB 863 (598KB PDF).