State Fund Brings Rate Relief

Employers Benefit From New Rate Reductions and Claims-Free Credit

More rate relief is coming to State Fund policyholders. Our average base rates have been falling since January 2004, enabling many employers to realize a noticeable savings in their workers’ compensation premium. Under our newest rating plan, in effect since July 1, 2005, State Fund policyholders are seeing further benefits that include:

• A continued reduction in base rates for policies that are new or renewing.
• A reduction in base rates effective July 1, 2005, for in-force policies with anniversary rating dates between January 1, 2005, and June 30, 2005.
• A new credit for employers with superior safety records.

The rate trend reflects the positive impact of California reform legislation, which has helped bring stability and cost savings to the workers’ compensation system. State Fund is committed to passing on these savings to our policyholders, and since January 2004, we have reduced average collectible rates by a cumulative 26.2 percent.

Double-Digit Rate Reductions for New and Renewal Policies

For new and renewal policies with an effective date on or after July 1, 2005, State Fund’s base rates represent an average decrease of 14 percent compared to the previous rates in effect since January 1, 2005. Our previous rate filing of January 1, 2005, had reduced rates by an average of 5 percent. As a result, policyholders renewing on or after July 1 reap an average cumulative decrease of 18.3 percent compared to the rate in effect on last year’s renewal date.

Midterm 3.8 Percent Rate Reduction for Existing Policies

State Fund policies with anniversary rating dates between January 1, 2005, and June 30, 2005, are receiving a midterm rate rollback of 3.8 percent on their unexpired term as of July 1, 2005. This reduction gives employers a small windfall on top of other workers’ compensation cost savings.

New Credit for Safety-Conscious Employers

The latest rates incorporate a new 10 percent Claims-Free Credit to reward employers who have minimized workplace injuries. This credit rewards State Fund policyholders for providing their employees with safer working environments and helping control the cost of workers’ compensation.

The 10 percent credit will be applied at renewal to policies with base premium from $1,000 to $74,999 on the renewal year, as long as total paid indemnity costs do not exceed $1,000 for the determining policy years.

For State Fund policies renewing on or after July 1, 2005, the following table spells out eligibility for the Claims-Free Credit:

*Employer must have been insured continuously by State Fund for all
applicable policy years.

A Note on Cost Savings

While State Fund rates are trending down, individual policyholder rates may vary. Your premium is dependent on additional factors, including changes in the class experience for an industry, experience modifications arising from individual policyholder experience, and changes in rating plan features.