State Compensation Insurance Fund president Dianne Oki told Calif. Insurance Commissioner John Garamendi and the Calif. State Assembly Insurance committee that State Fund may stop accepting high-risk accounts in efforts to defend it’s already precarious financial situation, according to the Los Angeles Times.
Oki likened the State Fund to an oversaturated sponge with nor more room for absorption. Oki said the company must stop writing new policies soon.
Garamendi told lawmakers that skyrocketing medical and legal costs are to blame for increased premiums.
According to the Times, neither Oki nor Garamendi could answer who would provide workers’ comp if State Fund stopped accepting new business. Oki may legally refuse to insure a business.
Additionally, Jim Neary, executive vice president of State Fund, told the committee that workers’ comp rates will most likely increase 9 percent in July 2003, followed by another 9 percent rate hike in Jan. 2004, and yet another 9 percent in Jan. 2005.
Insurance Journal will bring you the latest updates on this story as it unfolds.
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