Garamendi Calls for Larger Cuts to Workers’ Compensation Insurance Rates
Insurance Commissioner John Garamendi on Thursday criticized workers' compensation insurers for not passing savings on to employers and called for another 15.3% reduction in insurance rates for policies sold or renewed beginning Jan. 1, the Sacramento Bee reports (Chan, Sacramento Bee, 11/11).
According to Garamendi, insurers have reduced their rates by 26.7% through mid-2005 and are paying 38.5 cents to cover claims for every $1 they are earning in premiums (Lawrence, AP/Modesto Bee, 11/10). Garamendi has called for reductions totaling 36.5% over the past two years (Sacramento Bee, 11/11).
Garamendi said the cost of claims has declined by 42.6% since mid-2003, when lawmakers passed a series of reforms to reduce workers' compensation insurance for employers (AP/Modesto Bee, 11/11).
The Workers' Compensation Insurance Rating Bureau said insurance company profits are the highest they have been in 30 years (Lifsher, Los Angeles Times, 11/11). The bureau has called for a 15.9% reduction in rates for policies being sold or renewed as of Jan. 1 (Sacramento Bee, 11/11).
Garamendi said, "I have been hammering on the insurance industry since this reform effort began to immediately pass through any savings that materialized from the legislation. That has not yet been accomplished."
Garamendi suggested that Gov. Arnold Schwarzenegger (R) pressure the State Compensation Insurance Fund, which private companies usually follow in setting rates, to approve larger rate reductions.
Jim Zelinski, a spokesperson for the fund, said rates have been reduced an average of 28.9% since the end of 2003.
Nicole Mahrt, a spokesperson for the American Insurance Association, said Garamendi has not accounted for recent discounts offered by insurers, adding that "overall, insurers have taken at least a 30% reduction" (AP/Modesto Bee, 11/10).