Bureau Recommends 10% Reduction to Workers’ Compensation Insurance Premium Rates
Workers' compensation insurance premiums should be reduced by about 10% beginning July 1, according to a recommendation by the Workers' Compensation Insurance Rating Bureau, the Los Angeles Times reports.
The bureau on Friday is expected to make the recommendation official. Insurance Commissioner John Garamendi (D) must endorse the recommendation for insurers to consider it (Lifsher, Los Angeles Times, 3/24). The official rate, which is nonbinding, is expected to be announced later this month once Garamendi amends the recommendation (San Jose Mercury News, 3/24).
Typically, insurers follow the bureau's recommendation.
If the recommendation is adopted by insurers, employers would see the first double-digit reduction of insurance premiums resulting from efforts to reform the state's workers' comp system.
John Hannan of the bureau said that employers could realize cumulative savings of up to 31% when combined with rate reductions made since 2003, if the reduction goes into effect.
An analysis of workers' comp claims data and the recommendation show that the cost and frequency of claims have declined.
American Insurance Association spokesperson Nicole Mahrt said the recommendation "means the reforms are really starting to work."
Willie Washington, a lobbyist for the California Manufacturers & Technology Association, said, "We've been saying all along that once we got the regulations in writing ... we'll start seeing double-digit savings, and here they are."
But Angie Wei, a lobbyist for the California Labor Federation and a member of the bureau's board of governors, said the proposed rate reduction is "a move in the right direction" but rates need to be lowered further (Los Angeles Times, 3/24).