Garamendi Cuts Calif. Comp Advisory Rate 20.9%

Garamendi Cuts Calif. Comp Advisory Rate 20.9%

NU Online News Service, May 28, 3:55 p.m. EDT?California Insurance Commissioner John Garamendi announced today he will lower the advisory pure premium rate for workers' compensation insurance by 20.9 percent.[@@]

The department said this is "a clear signal that substantial savings from system reform are available to provide relief to employers currently paying the highest premiums in the nation."

According to the department, the recommendation from the commissioner represents the impact of the estimated $5.5 billion in savings from last year's reform as well as the impact of this year's reform, estimated to save $2.25 billion.

However, insurers are not bound to follow, the recommendation and two days ago Zenith, the state's fourth largest comp insurer, filed for a reduction of only 10 percent. The carrier's president, Stanley Zax told National Underwriter that Mr. Garamendi and Workers' Compensation Insurance Rating Bureau the state's statistical agent, which recommended a 15 percent reduction, "are not dealing with reality."

Commissioner Garamendi's decision , which insurers use as a benchmark, will affect policies issued or renewed on and after July 1, which the department said could have a significant impact on employer premiums for many businesses this year.

"The tremendous savings from these reforms will rejuvenate California's economy by reducing employer premiums, and providing better and more appropriate medical care to our injured workers," Mr. Garamendi said. "But our work is not finished. We must now do everything in our power to ensure that all of the savings go to premium relief for employers, and not to insurers' bottom lines."

Mr. Garamendi made the announcement at A-1 Door & Business Solutions in Sacramento. His department's announcement noted that employers have seen their premium rates skyrocket over the past several years primarily due to out of control medical costs and general system dysfunction.