Alarcon Announces Plans To Introduce Legislation To Regulate Workers’ Compensation Insurance Rates
Senate Labor and Industrial Relations Committee Chair Richard Alarcon (D-Van Nuys) on Wednesday announced plans to introduce legislation that would allow the state to regulate workers' compensation insurance premiums, saying that employers in the state have not seen a significant premium rate decrease despite legislation to reform the state workers' compensation insurance system enacted in April, the Los Angeles Times reports.
Alarcon's proposed bill is similar to one he introduced last year that was vetoed by Gov. Arnold Schwarzenegger (R) (Lifsher, Los Angeles Times, 1/6). The bill would establish a "rate-setting panel" to determine the minimum and maximum premium rates an insurer could charge on workers' compensation insurance policies, according to the Sacramento Bee. Under the proposal, insurers would have to seek approval from the state to increase rates.
Alarcon said he also plans to evaluate the workers' compensation reform plan after hearing accounts of injured workers experiencing delays in seeking medical care, according to the Bee.
The proposal is endorsed by the California Labor Federation and the California Applicants' Attorneys Association. The legislation is opposed by many Republican lawmakers and likely would be vetoed by Schwarzenegger, the Bee reports.
Alarcon also said that although he has not considered placing the bill on the statewide ballot, such a move is possible (Chan, Sacramento Bee, 1/6).
Alarcon said that workers' compensation insurance premiums have decreased by about 10% on average for California employers, while Schwarzenegger in April said that rates would decrease by about 30%.
Alarcon said, "We change nothing in the workers' compensation system if the smallest businesses do not get those benefits. We did nothing to hold insurance companies accountable for reasonable prices. They're gouging the state of California exactly as the energy companies did a few years ago" (Los Angeles Times, 1/6).
He added, "We are moving backward. We are reducing benefits to workers who are truly injured, and we are not passing on the savings to the smallest businesses in the state of California" (Calbreath, San Diego Union-Tribune, 1/6).
Schwarzenegger has said that he plans to evaluate the effects of last year's workers' compensation reforms before introducing further legislation on the issue.
Schwarzenegger spokesperson Vince Sollitto said, "It's premature to talk about regulation. All signs are pointing toward cost reduction, rate reduction and increased competition" (Los Angeles Times, 1/6). Sollitto added, "Rate regulation harms competition. From the governor's point of view, things are going in the right direction. Rates are coming down. More insurers are entering the market" (Sacramento Bee, 1/6).
Nicole Mahrt of the American Insurance Association said, "The renewed effort to seek rate regulation is a political smokescreen, part of a bigger plot being rolled out to undermine the reforms" (Los Angeles Times, 1/6). She added, "This is exactly what we should not be doing to fix the system. The full reforms for workers' comp have only been on the books for five days. Now is not the time to stop moving forward by introducing reregulation" (San Diego Union-Tribune, 1/6).