Calif. Commissioner Identifies Steps for State Fund to Reduce Workers' Comp Rates
West News • July 9, 2004
Insurance Commissioner John Garamendi released a statutorily mandated report on the State Compensation Insurance Fund's (SCIF's) potential to reduce workers' comp rates based on his review of its ...
Insurance Journal is not responsible for the content of the message below.
Subject: Garamendi Report on SCIF
Posted On: July 13, 2004, 4:32 pm CDT
Posted By: Brian Frohmuth
Comment:
The 1914 legislation creating a work comp system in California was only agreed to by the business interests of the day after it included the creation of the State Fund with the mandate to act to "stabilize" the State's Workers Comp insurance market. The business interests at that time were afraid of being wip sawed by the private insurers and wanted a non profit State chartered insurer to prevent that from happening.
Just as a tumultuous work comp market was descending on the State, State Fund rose to the challenge by maintaining rates very close to costs thus allowing California business a "reasonable" work comp market in which to continue. State Fund did this in the face of a very tight market brought about by many underlying work comp cost drivers. Those cost drivers have been some what addressed by recent legislation. (SB899) Now the Fund properly continues its mandate by maintaining a pricing schedule that allows the private insurers to gain back some market share. Thus, disaster was averted, and a healthy competitive work comp market is emerging again.
It is hard to understand how State Fund should be bashed by the Commissioner for very adroitly maintaining a work comp insurance market in California during very trying times. If the Fund had not acted as it did over the last few years, many more California businesses would have gone out of business. Now that private insures are returning to the market State Fund is continuing to aid a "stable" work comp market by not being the most competitively priced and maintaining its own financial strength.
Mr. Garamendi is apparently putting his political aspirations ahead of his sworn duty to keep the California insurance market viable. Perhaps Mr. Garamendi is still trying to divert attention from his departments failure to prevent the 27 work comp insurer insolvencies in the last few years that are now being run off by an overloaded and under funded California Insurance Guarantee Association CIGA.
I'm sorry that State Fund's unique relationship to the department of insurance prevents a more aggressive response these kinds of reports from the commisioner.
West News 
Subject: Garamendi Report on SCIF
Just as a tumultuous work comp market was descending on the State, State Fund rose to the challenge by maintaining rates very close to costs thus allowing California business a "reasonable" work comp market in which to continue. State Fund did this in the face of a very tight market brought about by many underlying work comp cost drivers. Those cost drivers have been some what addressed by recent legislation. (SB899) Now the Fund properly continues its mandate by maintaining a pricing schedule that allows the private insurers to gain back some market share. Thus, disaster was averted, and a healthy competitive work comp market is emerging again.
It is hard to understand how State Fund should be bashed by the Commissioner for very adroitly maintaining a work comp insurance market in California during very trying times. If the Fund had not acted as it did over the last few years, many more California businesses would have gone out of business. Now that private insures are returning to the market State Fund is continuing to aid a "stable" work comp market by not being the most competitively priced and maintaining its own financial strength.
Mr. Garamendi is apparently putting his political aspirations ahead of his sworn duty to keep the California insurance market viable. Perhaps Mr. Garamendi is still trying to divert attention from his departments failure to prevent the 27 work comp insurer insolvencies in the last few years that are now being run off by an overloaded and under funded California Insurance Guarantee Association CIGA.
I'm sorry that State Fund's unique relationship to the department of insurance prevents a more aggressive response these kinds of reports from the commisioner.