California insurers are supporting Insurance Commissioner Dave Jones's decision to recommend a 6.7 percent increase in workers' compensation rates for next year.

California's huge workers' comp system has been in flux for a number of years, and the state's combined ratio hit 140 in 2010.

While Jones' recommended pure premium rate of $2.70 per $100 of employer payroll is lower than the $2.75 recommended by the State Workers Compensation Insurance Rating Bureau, officials of the Association of California Insurance Companies (ACIC) point out that Jones' recommendation recognizes costs in the system.

The officials note the current combined ratio in the state is 120, and it is still not clear whether reforms imposed through a 2012 law will have the desired effect of lowering costs. The officials called the 2012 reforms a work in progress.

"Commissioner Jones made the right move when he recognized the ongoing cost increases in the state's workers' compensation system," says Mark Sektnan, ACIC president.

Sektnan says Jones is "taking a responsible position" and is being mindful of the importance of managing solvency and the ability to cover costs.

He says initial data on the 2012 reforms is available and "there is both good and disconcerting news."

Basically, Sektnan explains, "It is a waiting game to find out if the cost savings will occur or if unexpected developments will curb projected savings from being realized."

Jones' recommendation is advisory. According to Sektnan, insurers will take this recommendation and apply it to their book of business and determine the most appropriate rates necessary to cover costs and compete in the marketplace.

Special Reports /

Calif. Commissioner's WC Recommendation Recognizes Costs in System, ACIC Says

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