Posted On: May 9, 2008, 1:01 pm CDT

Posted By: Sell It ASAP!!

AM Best was aware of the CA marketplace in the early years of WC open rating and they were looking very cautiously at all carriers writing CA Work Comp. One reason the SCIF was downgraded was their premium fluctation. They operated for years without a rating so why did they need it. When SCIF management told the commissioner they would not let him look into their operations he sued and as SCIF does routinely they appeal every decision against them until they win or exhaust all avenues. Never at any time were they close to being involvent, that was pure politics pushing that idea, nor will it happen in the future. Their pricing is higher than the market and their loss ratios are better than expected. The previous hard market was caused by judges ignoring the WC reforms of 1992 and awarding huge PD awards based upon the opinions of doctors who made their money from the attorneys who referred business to them in exchange for high PD reports. The 2004 WC reforms stopped this practice and PD awards have been sharply reduced which in turn caused WC premiums to plummet. The Applicant's attorneys now have Sen. Don Perata in their hip pocket and he is trying to help them get their old system back. The latest scheme is to add sleep disorder, sexual dysfunction, and psych to their claims to get more money. The next hard market will come when CA elects a Democrat as governor then the party will gain full control as they have both houses of the legislature. Then they will undo all the WC reforms of 2004 and all the carriers will flee the market leaving only the SCIF. Without SCIF to fall back on, they may have to try to come up with a fair system for the good of the citizens of California who elected them for a change instead of the special interest groups. That won't happen and neither will selling the State Fund because of politics, pure and simple.