Garamendi Recommends 2.2% Rate Cut in Workers’ Compensation Insurance Premiums
Insurance Commissioner John Garamendi (D) on Wednesday recommended that workers' compensation insurance carriers reduce their premium rates by an average of 2.2% for policies issued or renewed beginning in January, the San Francisco Chronicle reports (Abate, San Francisco Chronicle, 11/18). Garamendi's recommendation conflicts with a September recommendation by the Workers' Compensation Insurance Rating Bureau that workers' compensation insurance premium rates increase by 3.5% for policies issued or renewed beginning Jan. 1 because of inflation-related increases in benefits (Lawrence, AP/Orange County Register, 11/18).
Garamendi said more premium rate reductions might be recommended after the Legislature approves a series of regulations on the workers' compensation reform law (SB 899), supported by Gov. Arnold Schwarzenegger (R). The recommendation is "a hypothetical rate designed as a target for the insurance industry to follow," according to the San Diego Union-Tribune.
David Schwartz, head of the California Applicant Attorneys Association, said, "I'm extremely disappointed, to say the least. The state has been cutting workers' benefits left and right in order to save the insurance companies some money, but that money isn't making it to the businesses" (Calbreath, San Diego Union-Tribune, 11/18).
Martyn Hopper, director of the California branch of the National Federation of Independent Businesses, said, "We expect that by this time next year, rates will be 15% to 20% lower. If rate reductions don't happen, small business is going to be very, very unhappy and will want to know specifically why and who is responsible."
According to Garamendi, the proposed decrease in premium rates shows that Schwarzenegger's $19-billion reform of the state workers' compensation insurance system "has not achieved its promise" (Lifsher, Los Angeles Times, 11/18). He added, "The insurance companies are in fact profitable. I believe that further savings can be passed on to the businesses of California from all of these (insurance) companies" (San Diego Union-Tribune, 11/18).
Sam Sorich, president of the Association of California Insurance Companies, said, "We're disappointed that the commissioner rejected the recommendation of the rating bureau" (Chan, Sacramento Bee, 11/18).