NU Online News Service, Aug. 12, 12:42 p.m. EDT
California Governor Arnold Schwarzenegger is opposing a suggested 29.6 percent workers’ compensation rate increase as the state’s Workers Compensation Insurance Rating Bureau (WCIRB) took another step toward filing the request with the Department of Insurance.
The WCIRB’s Governing Committee yesterday approved the Aug. 4 recommendation from the bureau’s Actuarial Committee for a 29.6 percent increase in workers’ compensation pure premium rates.
In a statement, WCIRB said, “Pure premium rates have not been increased since Jan. 1, 2009, and this is the third increase in excess of 20 percent filed by the WCIRB since then. If the full 29.6 percent increase is approved by the insurance commissioner, the Jan. 1, 2011 pure premium rates will still be, on average, 53 percent lower than the approved pure premium rates in effect Jan. 1, 2004.”
On Aug. 6, Jack Hannan, WCIRB communications director, said WCIRB recommended a 22.8 percent rate increase last year, but Insurance Commissioner Steve Poizner rejected it, so the state is “already starting at 20-25 percent inadequate rates.”
That, he said, combined with 2009 not emerging “as favorably as we thought it would,” according to Mr. Hannan, led to the current increase request.
Gov. Schwarzenegger, though, sent a letter to Commissioner Poizner asking him to reject the increase. He said insurers are not using tools contained in the state’s 2004 workers’ compensation reforms to control costs.
While medical costs escalated quickly in 2007, Gov. Schwarzenegger said, medical expenses in 2009 were up only 2 percent over 2008, and costs are no longer escalating at the rate they did in 2007. He added that insurers are reporting a reduction in their costs for administering, adjudicating and settling claims.
“Medical costs have increased only slightly, while loss expenses have declined. Where is the money being spent? This question must be answered before employers are asked to pay more,” Gov. Schwarzenegger wrote.
A department spokesperson said on Aug. 6 that the commissioner has no comment on the increase proposal since it has not been filed yet.
Last year, when rejecting WCIRB’s increase request, Commissioner Poizner vowed that workers’ compensation rates will not change “one dime” until insurers address avoidable costs in the system.
WCIRB said it expects to submit its filing to the department on or around Aug. 17.