FLASH REPORT:
Workers' Comp Rates Increased 37% by Commissioner Jones
Against a backdrop of a horrid economy and small businesses in trouble, California Insurance Commissioner Dave Jones today effectively approved a 37% increase in workers’ comp rates for 2012. The decision means California employers will pay a lot more for workers’ comp next year than they did last year. But Democrat Jones tried using numerical trickery to couch his decision and make it a non-news worthy event.
Couched as a flat rate of $2.30 it is just below the Workers’ Compensation Insurance Rating Bureau’s recommendation of a rate decrease of 1.8%. The 1.8% decrease used a calculation based on currently filed rates to recast a 39.9% increase as a decrease. Now, understanding the calculation is open to criticism, it has been further obfuscated into a blended rate for all employers which is essentially meaningless.
Jones, in a written statement said, “Today, I am pleased to announce that the advisory rate filing proposed by the California Department of Insurance has been approved,” said Insurance Commissioner Jones. The advisory claims cost benchmark has been set at $2.30 per $100 of employer payroll.”
This past spring, Workers Compensation Insurance Rating Bureau, a private organization owned and run by insurance companies licensed and doing the work of the Insurance Department, filed and then withdrew a 39.9% increase for 2012. Then, Commissioner Jones ordered that WCIRB stop benchmarking the pure premium rates from the previous approved rate and instead benchmark it against the average pure premium rates that carriers have currently filed. That’s how they arrived at the 1.8% decrease or a $2.33 average rate, which has been approved now as a $2.30 rate.
The resultant recommendation from WCIRB - a small decrease – was an enormous swing from what was on the table. WCIRB admitted no change in the underlying methodology, but despite the huge disparity, refused to provide an-apples-to apples comparison to its previous filings. It was stuck between Commissioner Jones and reality, or more proverbially, between a rock and a hard place.
And neither the WCIRB nor the California Department of Insurance will answer questions concerning the difference. The end result is still largely the same--a huge increase.
You can fool some of the voters some of the time but when in the end they have to write bigger checks the truth becomes apparent. Workers’ Comp Executive will have full coverage of Compline’s analysis of the holes in the Department’s explanation and calculations next week. There promises to be an explanatory tool which producers can use for employers to explain the subterfuge and resultant rate increase.
Filed by Dale Debber in Sacramento
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Emergency Preparedness: Crucial to Safety and Reputation
Cal/OSHA is placing a new found emphasis on emergency preparedness plans. Failure to have a written, well thought out emergency action plan in place can cost lives, livelihoods, and even without an accident lead employers directly to huge fines from Cal/OSHA. Cal/OSHA issues citations for not having a written plan (Title 8, section 3220).
“In general Cal/OSHA is more concerned with written documents taking more care to ensure that employer plans are completely documented,” says employer attorney Fred Walter, adding that in the past the inspector would say your plan is weak, beef it up. “Now they’re more likely to say you failed to include items six and nine therefore I’m issuing this citation.”
Under the new administration Cal/OSHA is increasing its enforcement efforts against employers. Fines go to the State’s general fund.
A record of those cites goes on all employers permanent record, is available to plaintiff’s counsel and can be used in cases involving employees as evidence against employers in a 132a proceeding or other legal actions – even those not involving safety and health.
“You can’t plan for a crisis when you’re having one,” Steve Gray, principal of Rockford Gray, a firm that provides executive level consulting on media training and crisis management, tells his clients. A written emergency action plan must be tested, reviewed and updated at least once a year.
Gray says that there is not a crisis without victims. People including regulators take notice if you don’t manage the situation and take care of the victims.
“You need to place highest value on human life. You can’t just say it, you need to believe it,” Gray says. “Your reputation is on the line because you’ve got victims, and you didn’t take care of them.”
An emergency action plan has to have a threat assessment, preparedness experts say. Until it is determined what manmade or natural disasters will affect a business, it will have zero effectiveness. There are specific plans geared fire, earthquake, chemical spills, and even bomb threats.
Avoid ‘template programs,’ or an emergency action plan that some other organization uses. It will likely not apply to your emergency situations, experts warn.
“An oil refinery has some of the same, but also a much different set of threats when compared to a local grocery store a mile away,” says Jim Wolbrinck, emergency preparedness specialist for the San Jose Water Company. “[B]oth may have to deal with the same earthquake fault, but the oil refinery has a much larger threat from terrorist activities, and the local grocery store is much more likely to have to deal with an armed robbery.”
The same can be said for a large agricultural operation that lies on a fault, but is more likely to face heat illness injuries and fatalities. Part of an emergency action requires specific procedures notifying first responders, especially in remote areas.
“It’s not like you can just pull it up on the GPS locator. You’ve got to work with landmarks and cross roads,” says Amy Wolff, executive director of Agsafe. “It’s about training your employees, here’s how we’re going to handle this, showing them maps…” she says, adding that with every shift someone is the designated contact for first responders.
Different Industries, Different Crises--Different Plans
Assess potentially hazardous situations and take steps to mitigate the risk. If a company stores chemicals in a building on the premises, keep an inventory of the chemicals and where they’re located, says John Gargiulo, senior loss prevention specialist with CSAC-Excess Insurance Authority.
He adds that in earthquake prone areas make sure high shelves are secure and take note of what’s on those shelves. If there are gas lines inside the building have a procedure for getting the gas turned off.
Employers need to think a process through. For example, once employees are evacuated where do they go? What about contractors? Are they on board with your EAP or are they following a different plan?
“Is the supervisor going to take roll? Do you know where that is? Just getting people to evacuate [is a challenge]…Can I go to my locker, can I get my purse, can I get my lunch? No, get out,” he says.
In Agriculture when directions like ‘Go three miles past the big rock on the left and then turn right down the dirt road’ are the best address. In those situations sending people out to help guide in responders is a likely part of the required plan.
As a company grows, procedures and technology need to be updated. “You can have a good plan in place, but if you start setting up satellite offices or have people working in the field…you need to make sure the people there know what to do,” Gray says.
Gray tells his clients to provide an escalating set of facts over time to see how employees respond to each situation. When the smoke clears after an emergency, run through the process. What didn’t work and what could have gone smoother. Use this to update an emergency action plan.
“It is essential to interview witnesses, secure the scene, document the scene and protect evidence,” Gray says. “Those investigations should be [used] for assessments and follow up with best practices.”
What’s the toughest aspect of emergency management response? Communication, Wollbrinck says.
“I’ve never been involve in an exercise or event where the participants say, ‘All aspect of communication worked great!’ It is just the opposite. The breakdown, lack of, or limited communication is always one of the top items in the After Action Report,” Wollbrinck says. “[L]ook at your common forms of communication and develop a plan for how you will continue to communicate should they go down.”
Wollbrinck says his company has multiple forms including land lines, cell phones and internet phones. It also has its own private radio network, and it’s just started working with a group that’s developing an “alternate internet,” if the internet goes down. “All forms must be used in day to day operations, or practiced with on a regular basis,” he says.
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California’s Temporary Total Disability Rate for 2012 To Increase
The California Division of Workers’ Compensation announced on Friday that the minimum and maximum temporary total disability rates for 2012 will increase on Jan. 1. The minimum TTD rate will increase to $151.57 and the maximum TTD rate will increase to $1010.50 per week.
The annual adjustment is tied to the state average weekly wage. This is the second consecutive year it has been adjusted upward.
SAWW is defined as the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending March 31 in the year preceding the injury. In the 12 months ending March 31, 2011 the SAWW increased from $979.90 to $1003.55. Read More
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401(k) plan contribution, other retirement plan limits upped for 2012
WASHINGTON—The maximum contribution that can be made to 401(k) retirement plans will increase next year as will the maximum benefit that can be funded through defined benefit plans, the Internal Revenue Service announced Thursday.
The maximum annual contribution an employee can make through salary reduction to a 401(k) plan will rise to $17,000 next year, up from $16,500 this year. In addition, the maximum annual benefit that can be funded through a defined benefit plan for a plan participant will increase to $200,000 from $195,000. Other changes -The IRS also said the amount of employee compensation that can be considered in calculating pension benefits and contributions to defined contribution plans will rise to $250,000 from $245,000. Read More
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