Workers’ Compensation Rating Bureau Estimates 2004 Losses To Shrink
The Workers' Compensation Insurance Rating Bureau on Tuesday announced that its 2004 projected total losses for workers' compensation insurance carriers would decrease by $7 billion to $17.9 billion, the Sacramento Bee reports. Late last year, the bureau estimated that California workers' compensation losses in medical and indemnity payouts to injured workers would be $24.9 billion in 2004. Bureau Senior Vice President Dave Bellusci attributed the estimated $4.5 billion in savings to AB 227 and SB 228 (Furillo, Sacramento Bee, 3/10). The bills, which former Gov. Gray Davis (D) signed into law in September, established fee schedules for treatments and prescription drugs; limited chiropractic and physical therapy visits; implemented reviews that use national standards to determine the proper amount of care for certain injuries; and increased penalties for employer fraud from $50,000 to $150,000 (California Healthline, 2/12). The remainder of the projected savings came from a recalculation of the size of the state's self-insured market from 30% to 20%, the Bee reports. Bellusci warned that the projected loss reduction is only a preliminary estimate, adding that it is too soon to determine if the projected loss reduction will result in lower workers' compensation insurance premiums. Nichole Mahrt, a spokesperson for the American Insurance Association, said that the bureau's projection is "a very interesting development" but agreed that it will not necessarily mean lower workers' compensation insurance premiums for employers. "This isn't the pure premium rate they're changing. It's just the projected losses," she said. However, Sen. Richard Alarcon (D-Van Nuys) said that he will ask insurance companies on Wednesday to revisit their rates for 2004 (Sacramento Bee, 3/10).
In related news, State Compensation Insurance Fund, the state's workers' compensation insurer of last resort, which provides coverage to about half of California businesses, last week announced a profit of $712 million in 2003, up from a loss of $66 million in 2002, the Contra Costa Times reports (Avalos, Contra Costa Times, 3/3). In its annual release to the Department of Insurance, State Fund announced that in 2003 its assets had increased 36% to $15.3 billion and that its policyholder surplus had increased by $637 million to $2.09 billion. State Fund premiums increased to $7.6 billion in 2003 from $5.4 billion in 2002. Investment income increased 20% from 2002 to $690 million in 2003 (Chan, Sacramento Bee, 3/4).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.