WCIRB RECOMMENDS 3.5 PERCENT INCREASE IN RATES:

At a Department of Insurance rate hearing in San Francisco on Sept. 15, the Workers’ Compensation Insurance Rating Bureau recommended that insurers raise workers’ comp rates by 3.5 percent in January 2005. Governor Arnold Schwarzenegger signed reform package SB 899 in April but so far the legislation has not resulted in significantly lower premiums. Insurance company representatives said that full cost savings would not be realized until permanent disability benefits are recalculated early in 2005. After the hearing, labor unions and lawyers renewed plans to petition the Legislature for rate regulation, according to the Los Angeles Times. Insurance Commissioner John Garamendi will shortly make a recommendation to insurance companies on whether to raise or lower their rates. “Today the Workers’ Compensation Insurance Rating Bureau (WCIRB) has proposed a 3.5 percent increase in the pure premium rate, to become effective January 1, 2005. This is only half the story,” Garamendi said in a statement. “I have also received valuable information from experts and industry concerning the status of the workers’ compensation system. SB 899 requires that regulations be written before it can be fully implemented. The Division of Workers’ Compensation Administrative Director stated that the regulations should yield cost savings. When the regulations are in place we may find sufficient savings to more than offset the WCIRB’S recommended 3.5 percent increase, and continue the rate reductions that commenced with the 2003 reforms.” The recommendation that Garamendi makes is not binding on the insurance companies.

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