California Issues 2007 Insurer Assessment Rates

The California Department of Industrial Relations (DIR) has issued 2007 assessment rates for User Funding, Anti-Fraud Programs, the Uninsured Employer Benefit Trust Fund and the Subsequent Injury Benefit Trust Fund. State law requires insurers to collect money from employers to cover 100 percent of the Division of Workers’ Compensation budget, fund the Department of Insurance and local District Attorney workers’ comp antifraud efforts, pay benefits to injured workers whose employers were uninsured, and to provide for those who suffer from previous and serious permanent disabilities and impairments.

DIR announced this week that insurers must apply the following rates against policyholders’ estimated annual “assessable premium” for policies incepting Jan. 1, 2007 through Dec. 31, 2007:

* 2007 User Funding Assessment (per Labor Code § 62.5): 0.004483
* 2007 Uninsured Employers Benefit Trust Fund Assessment (per Labor Code § 62.5): 0.000262
* 2007 Subsequent Injuries Benefits Trust Fund Assessment (per Labor Code § 62.5): 0.000618
8 2007 Anti-Fraud Surcharge (per Labor Code § 62.6): 0.001643

DIR noted, “Assessable premium is the premium the insured is charged after all rating adjustments (experience rating, schedule rating, premium discounts, expense constants, retrospective rating, etc.) except for adjustments resulting from the application of deductible plans or the return of policyholder dividends.”

To cover their portion of the 2007 assessments, DIR calculated that self-insured employers should apply the following rates against the total amount of workers’ compensation indemnity paid and reported on their Self-Insurer’s Annual Report.

* 2007 User Funding Rate (per Labor Code § 62.5): 0.019662
* 2007 Uninsured Employers Benefit Trust Fund Assessment (per Labor Code § 62.5): 0.001785
* 2007 Subsequent Injuries Benefits Trust Fund Assessment (per Labor Code § 62.5): 0.002727
8 2007 Anti-Fraud Surcharge (per Labor Code § 62.6): 0.005451.

Insurers must advance the money to the state on behalf of policyholders, then recoup the funds via workers’ comp policy surcharges and assessments. DIR notes that the first installment is due to the state on or before Jan. 1, 2007, with the balance due on or before April 1, 2007. The state is mailing letters and invoices to insurers and self-insured employers showing their share of the assessments and surcharges.

For more information, contact DIR Staff Services Manager Amadeo Urbano at 510-286-7083 or DWC analyst Naomi Carter at 510-286-7087.

Source: CWCI