Garamendi Recommends 18% Reduction for Workers’ Compensation Insurance Rates
Insurance Commissioner John Garamendi (D) on Wednesday called for an 18% reduction in workers' compensation rates for policies that begin or are renewed on July 1 or later, the Los Angeles Times reports (Kristof, Los Angeles Times, 6/2). Garamendi also recommended that workers' compensation insurers reduce rates by 3% to 4% for employers with policy renewals before July 1 (Chan, Sacramento Bee, 6/2).
Insurers are not required to adhere to Garamendi's recommendation, but it serves as a benchmark for insurers to use when setting rates.
In response to the recommendations, State Compensation Insurance Fund, California's largest workers' compensation insurer, said it will reduce rates by an average of 14% on policies sold or renewed effective July 1 (Calbreath, San Diego Union-Tribune, 6/2). State Fund also said it will implement a 3.8% rate rollback and a new 10% workplace safety credit. Some State Fund customers could see a rate reduction of more than 20%.
Zenith National Insurance, the state's third largest workers' compensation insurer, on Tuesday also announced that it will lower its rates by an average of 12% (Sacramento Bee, 6/2).
Garamendi has recommended a total of 36.5% in reductions in worker's compensation rates since January 2004. To date, State Fund has reduced its rates by 26.2% (San Diego Union-Tribune, 6/2).
In related news, the Senate on Tuesday approved a bill (SB 46) by Sen. Richard Alarcon (D-Van Nuys) that would create a three-member panel to set minimum and maximum rates for workers' compensation insurers.
The bill now goes to the Assembly for consideration (Sacramento Bee, 6/2).