California tends to have some of the highest workers' compensation rates in the country. In fact, just about everything in California seems more expensive. However, did you know that we currently are seeing some of the lowest rates our state has seen in several years?
Soft vs. Hard Markets:
Insurance professionals refer to insurance markets as "hard" or "soft." Simply put, a hard market is when losses start to get out of control, carriers respond by increasing rates or decline to offer coverage completely. The market dries up leaving less competition and higher rates. A soft market is when losses are stable and there are many markets competing for business. Recent workers' compensation insurance reforms have helped rates stay at these low levels, but carriers are beginning to see losses on the rise and are increasing their rates.
What does this mean for business owners?
Due to the downturn in the economy we have seen clients with lower than typical payroll. Combining low payroll and lower workers' compensation rates means business owners are seeing dramatically lower insurance costs. However, health care costs continue to rise. Losses are starting to take their toll on carriers and we are beginning to see the rates creep back up. To put this back into the roller coaster metaphor, business owners just finished the thrill of the ride because rates have dropped steadily for the past 4-6 years, but they are likely hearing the first clicks for the ride up to the next peak.
We prefer calm rides. Dramatic rate changes are difficult to handle for everyone. Unfortunately workers' compensation in California has historically been a "Space Mountain" rater than a "Peter Pan" adventure. Prepare yourselves now by managing your claims, revisiting your loss control efforts, and sticking with a carrier that can endure the ride. If you have questions about workers' compensation insurance or want to lock in your rates with a secure broker,contact us.