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In a major victory for IBA West, State Fund announced today they will recognize broker of record letters for direct accounts and pay commission for those accounts in accordance with their 2011 Broker Agreement. In making the changes, State Fund said their policyholders will also have more flexibility to choose how their workers’ compensation policy will be serviced.
"Recognizing brokers bring value to their clients through a variety of services, our 2011 Broker Agreement also increases the types of accounts for which brokers can receive commission," said State Fund.
This is a major change from their existing policy not to accept broker of record letters. Currently State Fund recognizes broker of service relationships on their direct placed accounts. Even though State Fund would recognize a broker for a direct account at the request of the policyholder, State Fund would not pay the broker any commission for servicing the direct account.
IBA West has been a strong proponent of the broker of record change and initially brought up the issue during the negotiations and implementation of the State Fund broker access program more than 15 years ago. Since then, IBA West leadership has met with every State Fund President, including new State Fund President, Tom Rowe, to discuss the importance of changing the State Fund broker of record policy.
“During our initial meeting with Tom, he said that he had already started a complete review of State Fund operations, including a review of the broker of record policy,” said Clark Payan, IBA West CEO. “We were confident that State Fund would see the value of making the change which is in the best interest of their brokers and policyholders.”
"Our mission is to provide an open and stable market for California employers and brokers. Our goal is to listen to our customers and provide as much flexibility as possible in our products and services, reflecting the diversity of California’s businesses. We know the past several years have been very hard on this state. We believe these changes will make us a stronger partner for California businesses," said Tom Rowe, President and CEO of State Fund who expressly cited the contribution of IBA West.
Policyholders who pay more than minimum premiums, who do not have or can not get broker representation and insure with State Fund directly, will receive a 3 percent credit on their policy.
State Fund also announced today a filed 5.2 percent overall rate increase for 2011. The new rates apply to new and renewal workers’ compensation policies with an effective date on or after January 1, 2011.
“We recognize these are difficult economic times for California business owners," said the State Fund in a release today. "This rate increase reflects only the inflation to claims costs. While focused on maintaining rate adequacy, we will also take another step in spreading credit ranges to more appropriately price all businesses and provide new opportunities for savings and better pricing for the best risks."
According to the State Fund, this rate filing expands the merit rating range for accounts $25,000 and above in premium to -/+ 40% to improve our ability to price businesses and to compete for those with excellent performance.