Analysis Finds Workers’ Compensation Rate Reductions Slow, Savings ‘Modest’ Since Reforms Enacted
Last year's workers' compensation reforms, which were supported by Gov. Arnold Schwarzenegger (R), have resulted in premium rate reductions that are "modest at best" and have "drastically slowed," according to an analysis of rate changes on file at the Department of Insurance, the Contra Costa Times reports. Premium rates that went into effect Jan. 1 had decreased by an average 2.4%, "not nearly as deep a cut" as the average 5.9% reduction for policies written or renewed beginning June 30, or the average decrease of 6.4% for policies written or renewed during the six-month period beginning Jan. 1, 2004, the Times reports.
Senate Labor and Industrial Relations Committee Chair Richard Alarcon (D-Van Nuys) has proposed legislation that would establish price controls on rates, and other critics have noted that the modest rate reductions are evidence the governor's plan has "stumbled badly," the Times reports.
Barry Gorelick, an attorney who represents injured employees in workers' compensation cases, said, "This is absolutely a disappointment. The crisis began because employers were in an uproar over premiums that were too high. Now, we're just getting reductions in drips and drabs. Employers are getting no real relief." He added that the pace of rate reductions could be attributed to workers' compensation insurance carriers because they "get to decide for themselves how much they want to reduce premiums."
However, Norman Williams, a spokesperson for the Department of Insurance, said that insurance carriers have to consider numerous factors, including "what the commissioner recommends for their rate changes, what are their experiences in the market and what are their losses" from paying claims.
Jim Zelinski -- spokesperson for the State Compensation Insurance Fund, the state's largest workers' compensation insurance carrier -- said that State Fund's Jan. 1 filing outlined an average rate reduction of 5%. Zelinski added, "We agree that California employers need further rate relief. When further cost savings emerge from the legislative reforms, rates will be reduced further. Some employers will see a greater decrease, others will see a lesser decrease" (Avalos, Contra Costa Times, 1/11).