Garamendi Recommends Lower Workers’ Compensation Rates
Insurance Commissioner John Garamendi (D) on Thursday recommended that insurance carriers cut workers' compensation rates by 9.5% for policies renewed or beginning Jan. 1, 2007, the Sacramento Business Journal reports.
The recommendation is higher than the 6.3% reduction recommended by the Workers' Compensation Insurance Rating Bureau, a research group that advises the state Department of Insurance (Sacramento Business Journal, 11/2).
If Garamendi's recommendation passes, it would be the seventh consecutive rate decrease since legislative changes to the system in 2003 and 2004. Garamendi has recommended cumulative rate cuts of 59.4% since July 2003.
The insurance commissioner's rates are used as a guideline for insurers but are not compulsory (Chan, Sacramento Bee, 11/3).
Garamendi said that insurers in 2004 and 2005 spent 31 cents of each premium dollar to provide services for injured workers, a situation he described as an indication that "not all of the savings are being used to benefit employers" (Sacramento Business Journal, 11/2).
Garamendi said that he has urged the Legislature and executive branch to address the situation (Sacramento Bee, 11/3).