Workers’ Compensation Insurance Premium Rates Decrease by Double-Digits in Last Six Months
Premiums for workers' compensation insurance policies written or renewed in the last six months have decreased by between 13.9% and 16.6%, marking the first double-digit decrease since 1995, according to records from the Department of Insurance, the Sacramento Bee reports.
Gov. Arnold Schwarzenegger's (R) administration in 2004 enacted the workers' compensation reform law (SB 899), which requires independent medical reviews, employer-selected doctor networks and new standards to determine benefits for people with permanent disabilities.
In the first nine months of 2004, employers' workers' compensation insurance costs on average decreased by $1.01 to $5.34 per $100 of payroll, according to a rating bureau report released last week. In addition, workers' compensation insurers posted profits for the first time since 1994.
Since the reform legislation took effect, Insurance Commissioner John Garamendi (D) has recommended that insurers reduce workers' compensation insurance premium rates by about 24%. However, State Compensation Insurance Fund, the state's largest provider of workers' compensation insurance, has reduced rates by 14.9 percentage points, on average, over that period.
Workers' Compensation Insurance Rating Bureau spokesperson Jack Hannan said, "Rates are coming down. Right now, it appears medical cost inflation has been impacted by the reforms. Medical costs were one of the primary drivers pushing rates up."
State Fund spokesperson Jim Zelinski said, "We understand that California employers deserve rate relief. We expect the last two reform measures will produce significant rate savings. It's going to take time for those savings to materialize."
Schwarzenegger spokesperson Vince Sollitto said, "A number of new insurers have joined the market. We're on the right path" (Chan, Sacramento Bee, 1/18).
In related news, the Bee on Saturday examined how workers are experiencing a "spate of denials" for reimbursement by some workers' compensation insurers as they re-evaluate employees' injury claims based on new standards for evaluating work-related injuries.
According to some employee advocates, the American College of Occupational and Environmental Medicine standards -- which under the reform law are used to determine approval for treatment -- are being interpreted so rigidly "that much-needed care is being stripped away," the Bee reports.
The guidelines will serve as the basis for treatment decisions until the Division of Workers' Compensation replaces them. DWC officials have not announced plans to develop such standards.
ACOEM President Timothy Key has said the guidelines were not created as a means for insurers to make treatment decisions.
DWC Associate Medical Director Anne Searcy said, "The ACOEM guidelines are to educate physicians. Things change in medicine. You constantly need to re-evaluate how a patient is doing" (Chan, Sacramento Bee, 1/15).
The California Supreme Court in December ruled that California Occupational Safety and Health Administration standards can be cited in testimony in injury lawsuits involving defendants other than a workers' employer. According to the Bee, "The ruling is expected to have a potentially big impact on the construction industry, in which workers are often injured because of missteps by someone other than their employer" (Osterman, Sacramento Bee, 1/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.