Outgoing California Insurance Commissioner John Garamendi said yesterday workers' compensation insurers are not passing on savings from legislative reforms to employers so he is recommending a 9.5 percent rate cut.

The cut he is calling for is -3.2 percent deeper than the -6.3 percent recommended by the insurance industry financed Workers' Compensation Insurance Rating Bureau.

Mr. Garamendi, who did not seek reelection and instead is the Democratic candidate for lieutenant governor, also urged making the system more helpful to injured workers.

He said his non-binding advisory recommendation is for policies going into effect after Jan. 1, 2007.

Since July 2003, Mr. Garamendi said he had recommended comp rate decreases to reduce system costs by a cumulative -55.1 percent and his latest recommendation would bring the cumulative total reduction in the cost of claims within the system to -59.4 percent.

The decreases, he said, have resulted from a continuing drop in claims frequency, decreasing total permanent disability payments and record low combined loss ratios for the industry.

Insurers, Mr. Garamendi announced, "must pass on all available savings to employers. In 2004 and 2005 workers' compensation insurers spent only .31 cents of each premium dollar to provide for injured workers. That is an historic low, and an indication that not all of the savings are being used to benefit employers.

"I have urged the Legislature and the Executive Branch to address these problems. No significant action has yet been taken to resolve them. For that reason, along with the others listed above, I have decided to recommend the -9.5 percent reduction proposed by my actuaries, and not the -6.3 percent decrease recommended by the WCIRB."

Mr. Garamendi said reforms he and Gov. Schwarzenegger pushed have helped stop an "uncontrolled escalation of premiums and reduced system costs by more than half."

But, he said, more improvements must be made, "primarily to ensure that injured workers receive the care to which they are entitled."

"I, and many others, have heard far too many reports of suffering by injured workers who don't receive proper compensation, or who experience unnecessary delays in receiving the medical care they need," he said. "Though the system is now more financially stable, it must be improved to deal appropriately with seriously injured workers seeking fair compensation and timely medical care."

The commissioner said medical treatment guidelines and a utilization review system that his department established to reform the system are necessary, "but they must be used to help injured workers, not to block or delay reasonable and prompt treatment."

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Garamendi Swan Song Is -9.5 Comp Rate Cut

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