Calif. Ins. Industry Welcomes Schwartzeneggar

By Caroline McDonald

NU Online News Service, Oct. 10, 4:17 p.m. EDT?With workers' compensation reform a major priority in the state, California Insurance Commissioner John Garamendi and a national insurance group made welcoming overtures to Governor-elect Arnold Schwarzenegger and expressed optimism about the state's workers' comp program.

"[Gray] Davis was a strong supporter and a participant in the success of the first step of workers' compensation reform," Mr. Garamendi relayed through Department of Insurance spokesperson Norman Williams. "We look forward to working with governor-elect Schwartzneggar on the second phase of this effort."

Mark Sektnan, assistant vice president, state affairs for the American Insurance Association in Sacramento, Calif., said he believes "the Governor-elect will make comp a major focus of his effort to bring business back into California. His efforts on this, we hope, will prove fruitful."

Mr. Sektnan said the legislature, Mr. Garamendi and the Schwartzneggar campaign all "have acknowledged that a lot more work needs to be done on reforming the system if we are ever going to truly bring down costs."

He said that workers' comp reform bills "were an important first step, but there needs to be a lot of work done? to make sure they work as intended."

Yesterday, Mr. Garamendi sent a welcoming open letter to Mr. Schwarzenegger. Today he delivered the keynote speech to a group of about 300 workers' comp professionals attending the Association of Workers' Compensation Professionals fall convention in Sacramento. His focus was the workers' compensation reform package recently signed by Gov. Gray Davis.

Mr. Garamendi also outlined step two of his plan, which includes:

? Changing the "grossly inefficient and highly subjective permanent disability rating system" to remove inequities and ensure a quality benefit.

? Eliminating administrative inefficiencies that cause intolerable delays in the system.

? Establishing rules that put all medical components under a Medicare-indexed fee schedule.

? Fixing the irrational penalty structure.

? Getting injured workers back to work quickly by reducing the time on temporary disability.

? Continuing to eliminate fraud and abuse in the system.

Mr. Garamendi's letter to Mr. Schwarzenegger reads:

"Congratulations on the success of your campaign.

"I look forward to discussing with you the many insurance issues that confront consumers in California, and to working with you to protect their interests while maintaining a healthy insurance industry.

"As you are aware, the Legislature and Governor Davis passed a new law based on my road map to reform of the workers' compensation system. This law is but the first step in the process to total reform and will reduce claims costs by $4 billion to $6 billion.

"Because it is imperative that we take step two immediately, we are already working with business and labor to structure the required reforms. Obviously, it is critically important to have your leadership and direct involvement in drafting and passing the legislation necessary to accomplish the second phase of overall system reform. I would, therefore, like to meet with you to discuss our current direction as soon as possible during your transition.

There are many other insurance issues facing business and individual insurance consumers in California and I look forward to briefing you and working together to resolve them."

Jeanne Cain, vice president, state affairs for the AIA also issued a statement:

"We would like to congratulate Governor-elect Schwarzenegger on his election and his decision to take on the difficult task of governing California.

"We look forward to working with the governor-elect in re-establishing California as the land of opportunity, a place where entrepreneurial ideas and businesses flourish?and the number of good jobs grows.

"Today, many serious issues face the insurance industry and the general business community here in California. We stand ready to work with Governor-elect Schwarzenegger on further reforming the workers' compensation system, stopping the flood of frivolous lawsuits that raise the cost of all consumer products, and creating a competitive insurance environment in which consumers can purchase home and auto insurance products best suited to their needs."

Special Reports /

Calif. Ins. Industry Welcomes Schwartzeneggar

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