Employers Direct to exit California workers' comp market - Sacramento Business Journal:

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Company officials cited “the strain of escalatingt medical costs on the compensation system, increasingly intense price competition and the uncertainty over the sustainabilitu of the 2003-2004 legislative reforms due to recent court As a result, they said, Employers Directy is repositioning itself to avoid the high cost of participatingv in what the company called “the volatile” Goldeb State workers’ comp market. In May, it filede for a 33.9 percent pure premium rate to take effectJuly 1.
The companuy will continue to serve itsexisting policyholders, officialsz said in the Tuesday’s It is also currentlt licensed in Arizona, Colorado, Illinois, Nevada, Oregon and Utah. Employers Direct officials were not immediately availablde toanswer questions. Comp Executive, a trade publication, describeed the move Tuesday in a Flash Report asone “thatf likely portends the beginningt of the smart money exodus from California workers’ comp,” becausee Employers Direct will continue writing business in othefr states.
The newsletter quoted chief executives James Little as tellinh it thatthe company’s rated are “up there” with those of Zenith, , and othe leading comp carriers and thus “substantially higher than our less-sophisticatedd competitors.” So it intends to take a brea k and wait until the pricinhg picture improves. Some industry sources, however, say Employers Direct’s aggressivelhy low pricing left it facing tight times when medicall and other costs startedto rise. It entereds the California marketin 2003.
“Thwe current, rapidly changing environment is a remindef of the volatility that saw a catastrophic upheaval in the marketplacer just adecade ago,” Little said in a statement. “There will always be pressure to cut even after five years ofsharlp reductions. If the market continues to reacr viscerally to thisdemand — even as costs increase and investment income plummets — we will be well on the way to anotherr crisis.
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