Rancho Mesa's Alyssa Burley, Media Communications & Client Services Manager, and Account Executive Casey Craig discuss pure premium and how it impacts businesses.
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Director/Producer/Host: Alyssa Burley
Guest: Casey Craig
Editor: Lauren Stumpf
Music: "Home" by JHS Pedals, “News Room News” by Spence
© Copyright 2021. Rancho Mesa Insurance Services, Inc. All rights reserved.
Transcript
[Introduction Music]
Alyssa Burley: Hi, this is Alyssa Burley with Rancho Mesa’s Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa news brought to you by our Safety and Risk Management Network, StudioOne™.
Welcome back everyone. My guest today is Casey Craig, Account Executive with Rancho Mesa. He specializes in risk management for drywall, plaster, and painting contractors. Today, we’re going to talk about pure premium and how it impacts businesses. Casey, welcome to the show.
Casey Craig: Great to be back in the studio, Alyssa.
AB: Will you first explain to our listeners the role the Workers’ Compensation Insurance Rating Bureau or WCIRB has on the pure premium?
CC: The WCIRB is an agency that compiles essential data annually which determines how your Experience MOD is impacted. These factors establish the baseline average MOD of 1.0 for California companies that produce enough payroll and premium to qualify within the guidelines. These factors can change year to year and represent a key rate trend indicator for all policyholders.
AB: So, will you explain how the workers’ compensation pure premium is determined?
CC: There are different rates generated for different classifications based on exposure and projected losses. The premium company’s pay for workers' compensation begins with multiplying the insurer's rate for the assigned classification by the payroll in each classification. Workers' compensation rates are applied per $100 of payroll.
AB: How can we ensure that the premium rates generated by WCIRB are accurate?
CC: Um, pulling directly from the WCIRB website here, “The WCIRB submits advisory pure premium rates to the California Department of Insurance for approval. Insurer’s rates are usually derived from the advisory pure premium rates developed by the WCIRB and approved by the Insurance Commissioner. Advisory pure premium rates, expressed as a rate per $100 of payroll, are based upon loss and payroll data submitted to the WCIRB by all insurance companies. These rates reflect the amount of losses an insurer can expect to pay in benefits due to workplace injuries as well as the cost for adjusting and settling workers' compensation claims. Pure premium rates do not account for administrative and other overhead costs that the insured will incur and, consequently, an insurer's rates are typically higher than the pure premium rates.”
AB: So, when are these rates released?
CC: New pure premium rates were just released in September. Each carrier’s individual experience with all respective class codes also has an impact on these rates. Workers’ compensation has been in a soft market for the past several years with the expectation that rates will gradually start to increase. Following the change in pure premium rates is a great indicator of where the marketplace is heading and effective way to better understand future costs for your company.
AB: With this in mind, engaging a broker that specializes in your industry and prepares you accordingly for the renewal process is a critical step in controlling workers’ compensation costs. Part of this process begins with understanding pure premium rates and how they will ultimately impact your MOD, carrier base rates, and your renewal pricing.
Casey, if clients have questions about the current market, or how their XMOD is affecting their workers’ compensation premium, what's the best way to get in touch with you?
CC: Yeah, I can be reached at (619) 438-6900 or you can email me at ccraig@ranchomesa.com.
[Closing Music]
AB: Casey, thank you for joining me in StudioOne™.
CC: Of course, thanks for having me.
AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning in to our latest episode produced by StudioOne™. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.