State Workers’ Comp Insurer Will Not Hike Rates in 2008
On Monday, the State Compensation Insurance Fund announced it will not raise rates for workers' compensation policies for next year, despite expected cost increases and pressure from an insurer group to raise the rates, the Sacramento Bee reports (Chan, Sacramento Bee, 11/27).
State Fund is the largest workers' compensation insurer in California, controlling about 32% of the market and collecting $3.6 billion in premiums in 2006 (California Healthline, 9/4).
The decision to maintain the current rate will help small-business owners who were expecting to see the first rate increase since state reforms to the workers' compensation system four years ago.
The Workers' Compensation Insurance Rating Bureau had recommended increasing rates an average of 5.2% for next year to recover costs for legal work, fraud investigations and other tasks to manage claims, according to insurers. Insurers also anticipate paying $71 million more in temporary disability benefits in 2008 due to a new state law extending the eligibility period.
State Fund's announcement means it will have to absorb any cost increases without collecting higher premiums. Jeanne Cain, State Fund chair, said, "Prices are down substantially from their high point in 2003 and stable going into 2008."
Insurance Commissioner Steve Poizner (R) is reviewing WCIRB's suggestion and expects to issue his own recommendation by Wednesday.
The insurance commissioner's recommendation is not binding, but private insurers often consider it a guideline for setting their own rates (Sacramento Bee, 11/27).