Workers’ Comp Rates Decline; Rate Regulation Still an Issue for Lawmakers

June 28, 2004

Despite reductions in workers’ comp insurance premiums, California lawmakers will continue to debate the merits of rate regulation.

After years of double-digit rate increases, many companies have filed with the California Department of Insurance (CDI) to lower their rates on July 1. As of June 21, 70 companies, or roughly one-third of the market, had filed for rate reductions with CDI. Of those 70 companies, eight of them met Garamendi’s recommendation and lowered rates by about 20 percent, while 16 insurers lowered rates between 15 and 20 percent. Many companies lowered rates by 10 to 15 percent (27), and 19 companies filed for rate reductions under 10 percent.

A rate regulation bill, ABX4 No. 16, after passage in the Assembly on a party-line vote, was supposed to be heard by the Senate Labor and Industrial Relations Committee on June 23. That hearing was postponed and as of June 25, the bill had not been rescheduled. But an industry spokesman said that rate regulation will continue to be debated by lawmakers in the near future.

“I don’t think we’ve seen the last of this issue for this legislative session, which ends at the end of August,” said Sam Sorich, president of the Association of California Insurance Companies (ACIC). “I would imagine that before this session ends, there will be another push or two to pass legislation to change our current regulatory system for rates.”

The bill, sponsored by Assemblyman Lloyd E. Levine (D-Van Nuys), would allow the insurance commissioner to disapprove rates set by carriers if he feels that the rates are inadequate.

Insurance Commissioner John Garamendi, who is opposed to rate regulation, recommended that workers’ comp insurers lower their premiums by 20.9 percent on July 1. CDI spokesman Norman Williams said that the commissioner’s recommendation meant lowering rates 20.9 percent from where they were a year ago.

“His recommendation of 20.9 percent would apply to policies that renewed on July 1, 2003, so that would be the cumulative reduction from both sets of reforms,” he said. “Some people have interpreted [the recommendation] as the last reform, but it’s actually both sets of reforms.”

For the full story, see the July 5 edition of Insurance Journal West.

Was this article valuable?

Here are more articles you may enjoy.