Workers’ Compensation Insurance Premium Rates Decrease By 13.8% on Average in Past Six Months

After a "steady dose of double-digit annual increases from 2000 to 2003," the two "major overhauls of the beleaguered" workers' compensation system have caused premiums to decrease by an average of 13.8% in the past six months, the Sacramento Bee reports. The decrease includes the premium rate cuts of 70 carriers in January and upcoming premium rate cuts in July. The premium rate reductions range from 1.59% to 20.94%; the State Compensation Insurance Fund, which provides workers' compensation insurance to more than half of California employers, has reduced premium rates by an average of 9.7%.

The workers' compensation premium reductions "fall short of earlier forecasts" and have "rejuvenated a campaign by Democrats, labor leaders and others" to regulate premium rates, the Bee reports. "The rate cuts should have been bigger. I am quite surprised that (State Fund) didn't lower their premiums a little more. That's a big signal to the market," Frank Neuhauser, a workers' compensation analyst at the University of California-Berkeley, said. Robert Blum of the California Applicant Attorneys' Association said, "We are starting the process to convince the people of the state of California and the governor that workers' compensation should not be the only form of insurance that is not regulated."

Nicole Mahrt, spokesperson for the American Insurance Association, said, "Insurers are expected to slash rates when they haven't seen cost savings. Companies are taking a leap of faith." J. Michael Nolan, president of the California Workers' Compensation Institute, said that as long as workers' compensation carriers "make reductions in the 10% level, I don't think there will be enough momentum for rate regulation." He added, "If they don't come with additional reductions in January, there will be increasing pressure for rate regulation." Sara Lee, spokesperson for the California Chamber of Commerce, said, "We're starting to see savings. The reforms are working." She added, "It's going to take some time before the total savings are realized." In addition, Nolan said that more workers' compensation carriers are interested in entering the state market because of the reforms (Chan, Sacramento Bee, 6/28).

KPBS' "KPBS News" on Monday reported on the decreasing workers' compensation insurance premium rates. The segment includes comments from attorney Felipe Hueso, who represents injured workers (Goldberg, "KPBS News," KPBS, 6/28). The complete transcript of the segment is available online. The complete segment is available online in RealPlayer.