The State Compensation Insurance Fund, or SCIF, the quasi-public San Francisco-based workers’ compensation insurer, announced a mid-year rate hike of 15%, effective July 1. While this may sound like bad news for a quarter of California’s employers who are covered by SCIF, the news could have been a lot worse – the 15% increase is significantly lower than the 27.1% increase recommended by the Workers’ Compensation Insurance Rating Bureau (WCIRB) earlier this year.
Almost ever carrier in the state has also reported increases -
- Woodland Hills’ Zenith Insurance Co., one of the bigger players in the California comp niche, filed for a 4 percent July increase
- Two Berkshire Hathaway Inc. entities have filed for 10.3 percent increases
- Several Guard Insurance Group companies, meanwhile, filed for jumps in the 2.2 percent to 5 percent range.
So what can you do to avoid the inevitable? Here are 3 simple starters…
Be safe! Insurance companies will first view the loss history of an individual company before instituting rate increases. The Loss Ratio (the ratio of losses paid out versus premiums paid in) is the most important factor in determining rate increases. Even while published base rates state-wide may be increasing, a company with a low loss ratio can still experience a decrease.
Shop around. Certain insurance carriers have a preference for specific insurance risks. Some may prefer white collar business, while others may pursue riskier “blue collar” operations such as construction and transportation. As your broker to submit your renewall to several carriers and compare costs.
Join a PEO (Professional Employer Organization). A PEO is a firm that specializes in managing all the responsibilities relating to employees. A PEO legally hires a company’s current employees, thereby making the PEO the “employer of record” for taxation and insurance purposes. Because the PEO pools thousands of employees and hundreds of clients, they are able to negotiate significantly lower premiums than any small, individual business could on their own. It sounds complicated, but it’s really very simple – economies of scale.
Click here to find out more about Professional Employer Organizations and to explore the possibility of procuring lower workers’ compensation premiums for your business.
