IMPORTANT REMINDER REGARDING 2003 CALIFORNIA WORKERS’ COMPENSATION INSURANCE RATE INCREASES

Dear Valued ABD Client:

As the New Year begins, we thought it appropriate to remind everyone of the California worker’s compensation rate increases taking place in 2003. Pure premium rates have gone up again, driven in large measure by significant benefit increases that were part of Assembly Bill 749, signed into law by the governor last February. (Click here for details regarding AB 749)

Following passage of AB 749, the Insurance Commissioner approved a 10.5% increase in pure premium rates applicable to all policies with anniversary rating dates in 2003. (The WCIRB had filed for an average 13.4% increase).

More immediately, the Commissioner also approved a 0.2% increase in the pure premium rates from the effective date of 2002 policies plus an additional 4.9% increase effective January 1, 2003 until policy expiration (The WCIRB proposed an increase of 5.9%).

Insurance companies are taking differing approaches on how this rate increase will be applied. Some carriers are endorsing policies effective January 1, 2003 and pro-rating the rate increase from January 1st to the normal expiration of your policy. Some will simply capture the increase when they conduct their final audit following policy expiration. Still others (notably the State Fund) are increasing rates on all unexpired 2002 policies by 5.1% as of January 1st (the increase will apply to the remaining 2002 policy term only). You should have received (or should shortly receive) an endorsement or notice from your insurance carrier outlining the specific approach they will take.

During these difficult times ABD will to continue to provide you with superior insurance products and risk management services. Despite the challenges presented by the present economy and current insurance market, you can expect us to continue as an aggressive client advocate, working extremely hard to deliver the very best counsel, pricing and coverage terms that are available.

If you have questions or require additional information please do not hesitate to contact your broker, service team or anyone else here at ABD. As always, we very much appreciate having you as a client and will do our utmost to earn your continued loyalty, confidence and respect.

Sincerely,

Dave Hock
SVP – Business Development Manager
ABD Insurance and Financial Service
(650) 839-6244
dwh@abdi.com