The dire condition of California’s workers’ comp market was reaffirmed Wednesday during the second in a series of hearings held by Assembly Insurance Committee Chairman Thomas Calderon.
ABL Lobbyist John Norwood presented the results of a recent IBA West member workers’ comp survey, showing that the cost of workers’ comp insurance to California employers has risen substantially in the last year.
At the same time, the number of agency appointments to write comp insurance has decreased, and the reliance on the State Compensation Insurance Fund has increased substantially, the survey found.
“Ninety-five out of 147 agencies (64 percent) said that 100 percent of their clients–every single employer-was paying more for workers’ comp. insurance today than a year ago,” Norwood told the committee. “An additional 30 percent of agencies reported that between 90 and 99 percent of employers were paying more.”
Norwood also said premiums increased in the last year by as much as 400 percent, but 52 percent of agencies reported their employers were paying average premium increases of between 11 and 20 percent.
“Employers are aware of, and very concerned about, the solvency of workers’ comp insurers,” Norwood said. “More than half of agencies reported that employers had expressed concerns or asked questions about their own insurance company’s solvency.”
According to the survey, agents are also going on fewer appointments related to workers’ comp. More than half of the responding agencies reported that various insurers were refusing to write or renew particular comp classifications-especially building contractors and artisans, farms, and new ventures. Reliance on the State Fund is increasing, according to the survey results.
“A year ago, the State Fund was the largest workers’ comp market for about one-third of the respondents,” Norwood said. “On Jan. 1 of this year, it was the largest for almost 70 percent of the agencies.”
Norwood closed with a plea to the committee not to aim legislation efforts at the State Fund and recognized the difficulties currently plaguing the market. “Whatever you do, don’t make the current situation worse,” he said.
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