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In 2012, insurance carriers saw $25 Billion of losses associated with Hurricane Sandy. Much like last year, even though California’s social service agencies were not directly hit by any major disasters, all agencies will feel the impact.
If global underwriting losses remain high (combined loss ratios of 108% in 2011) and reserves continue to be depleted, insurers may be forced to raise rates. However, increases in market capacity will have a dampening effect on rate increases. Although rates may remain flat or increase modestly in 2013, increases are not likely to be across the board. We are seeing underwriters take a much closer look at each account and each line of coverage. Below is a summary by line of coverage. Remember that individual loss history and exposure increases/decreases will dictate the final premium.Workers’ Compensation – After several years of warning that rates could not persist at the current low levels, July 1, 2012 marked the turning point. After five years of underwriting losses, rates are increasing dramatically. In May of last year, Insurance Commissioner Dave Jones approved a 45% rates increase effective 7/1/12. Last week Commissioner Jones recommended an additional 6.81% increase in rates due to the passage of SB 863 which was supposed to provide some rate reductions. In addition to rate changes, payroll changes as well as your Experience Modification will have an impact on your premium.Property – Due to the high catastrophic property losses mentioned above, we project property rates to be flat to slightly up in 2013. Organizations who experienced property losses in 2012 can expect to see high single digit increases at renewal.General Liability – Rates are projected to increase 0-10% in 2013.Professional Liability – Rates are projected to increase 0-10% in 2013.Auto – Rates are trending up slightly, with an expected increase of less than 5% in 2013.Directors & Officers / Employment Practices Liability – Due to an increase in claims related to Employment Practices as well and Wage & Hour claims, both rates and deductibles are projected to increase 10%-25% in 2013.