California is no longer the most expensive state for workers'compensation insurance, according to a report released by thestate's Division of Workers' Compensation.

Conducted by Sacramento-based Bickmore Risk Services for thedivision, the study found that California now ranks behind Florida,Montana, Alaska and Texas in average filed workers' comp rates.

"The study contains positive news for the California workers'compensation system," said DWC acting administrative directorCarrie Nevans. "Rates have been reduced and competition hasreturned to California's market."

The report was mandated in the last California workers' compreform bill, which mandated research to determine the effects ofrecent comp legislation on the marketplace.

Overall, the study projected the average approved insurance ratefor 2006 to be $2.59 per $100 of payroll, roughly 46 percent lowerthan the rate of $4.81 per $100 of payroll in the second half of2003. Additionally, the report found the rates for 2006 areactually below what was being charged for workers' comp coverageten years earlier.

Absent the reforms, and assuming that costs continued toincrease by 10 percent annually, the report estimated claims costsfor policies that began in 2006 would have been $15 billion greaterthan is currently expected.

Without the reforms, but with claims costs steady at 2003levels, the report said the projected claims costs for 2006 wouldbe $8.1 billion higher than current projections.

Additionally, the study found the State Compensation InsuranceFund, the state insurer of last resort, has seen its market shareshrink from 58 percent of the market in 2003 to only 41 percentlast year.

Private insurers have begun to undercut the SCIF's rates, withrates averaging 15.2 percent lower, according to the report. In2001, private workers' comp insurers charged an average of 2.1percent more than the state fund.

The state market is still not as competitive as it could be, thereport noted, as the SCIF maintains a commanding position in themarket and there are fewer companies than in most states.

With competition increasing, however, the report cautionedagainst allowing a cutthroat level of competition to arise.

The report recommended that California monitor pricing to ensureit remains reasonable, analyze changes in market share, monitor thecompetitiveness and effectiveness of medical provider networks, andstay abreast of workers' comp-related developments in other statesthat could be applied to California.