California workers’ comp reforms working

The Workers’ Compensation Insurance Rating Bureau of California has completed its report summarizing insurer loss and premium experience through Sept. 30, 2006. The data seems to verify that workers’ compensation reforms are working to bring costs down.

However, “there is much room for improvement, and I look forward to seeing what the Department will accomplish in the years ahead,” said outgoing state Insurance Commissioner John Garamendi.

When he took office in 2003, Garamendi said the California workers’ compensation insurance industry was in “crisis,” with high premiums and claims costs rising at nearly eight times the rate of inflation.

“The dysfunction in the system threatened to cripple business and rob the state of its economic vitality,” Garamendi said. “But today, it’s a different landscape. We’ve made much progress; the State Compensation Insurance Fund has lowered its rates and reduced its share of the insured market from over 50 percent in 2003 to less than 40 percent in 2006. This reduction in market share has enabled increased competition and a healthier market going forward.”

Among the highlights quoted from WCIRB’s report were that after reflecting the estimated impact of Assembly Bill 227, Senate Bill 228 and Senate Bill 899 on unpaid losses, the ultimate accident year losses for 2005 are projected by the WCIRB to be $6.4 billion. This represents a decrease in estimated losses of approximately 11 percent from the ultimate losses currently projected for accident year 2004 and 46 percent from the ultimate losses currently projected for accident year 2002,” the report states.

The summary report is based on data reported to the WCIRB by insurers who wrote about 90 percent of the state market using 2005 premium levels. To view the report, visit https://wcirbonline.org/resources/data_reports/pdf/093006_insurer_exp.pdf.

Topics California Workers' Compensation