AIA: Attorneys Call for Workers’ Comp Rate Regulation

January 7, 2005

Democratic lawmakers and attorneys are using the recently implemented workers’ compensation reforms as a tool in their game to undermine Gov. Schwarzenegger’s track record, according to the American Insurance Association. AIA said that renewed demands for restrictions on workers’ compensation rates and attempts to stall implementation of the reforms are just one part of a bigger plot to undo the reforms and protect the pocketbooks of applicant attorneys.

“The reforms enacted last year in SB 899 must be starting to work because the applicant attorneys are increasingly desperate. The attorneys are doing everything they can to stop the reforms and restore a corrupt system that is profitable for them but harmful to California’s workers and employers,” said Ken Gibson, AIA vice president, Western region. “Nearly a dozen new companies have entered or expanded in California’s workers’ compensation market since SB 899 was signed into law last year with the hope that this state had finally fixed its workers’ compensation system. But now, just as the reforms are finally beginning to take hold and progress is being made, Sen. Richard Alarcon (D) and the California Applicant Attorneys’ Association want to turn back the clock to 1992.

“Seventy-seven (77) California Assembly members and 33 California state senators voted for SB 899 last April. Now, just as the most important provisions of the bill are beginning to take effect, some policymakers want to renege on the deal. This is not good for California’s marketplace, large or small employers, public entities, or injured workers,” Gibson said.

“Rate regulation will suffocate a market that is just beginning to breathe again. Carriers cannot afford to sell insurance in a state that exerts extreme control over rates and does not allow insurers to charge rates that cover their costs,” Gibson explained. “California workers’ compensation insurers have been in the red for a decade. Two quarters of improved results does not equal excessive profits; it means the reforms are beginning to work and the legislature and governor did their jobs by enacting genuine systemic improvements and cost-saving reforms.”

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