Need For Calif. WC Rate Reg. Disputed

During the past 10 months, he said, the Legislature and governor have enacted major reforms to overhaul California's badly broken workers' comp system. "Those reforms, still in their embryonic stages, are nevertheless having an impact already. Rates are declining and the workers' compensation system, after a decade of turbulence, is finally stabilizing," he noted

Mr. Sorich said the reforms must be given more time before their effects will be felt, "perhaps years in some cases," noting that one of the key cost savers for permanent disability will not even take effect until 2005.

"Imposing insurance rate controls would disrupt the reforms as well as the operation of an open and competitive marketplace?the best way to assure lower rates for insurance customers," he said.

Many employers and business groups have complained about the state Workers' Compensation Insurance Rating Bureau's announcement that it may file a recommended 3.5 percent rate increase for policies after Jan. 1, 2005. They said they had expected to see rates drop significantly.

Mr. Sorich argued that those who say the continued increase demands a need for rate controls failed to note that the increase reflects a state mandated increase in benefits for injured workers.

"Those increased benefits are one of the reasons workers' compensation rates had to increase," he explained.

He added that proponents of rate regulation also failed to point out that even with a 3.5 percent rate increase, "the suggested rate will still be 27 percent lower than what it would have been had the recent reforms not been passed."

As the reforms were passed, public officials touted savings for businesses. Those savings have not arrived as swiftly as businesses were lead to expect, but Mr. Sorich said that given time to work, the reforms will reduce costs of coverage.

"The message in all this is that the reforms enacted into law during the past 10 months are working," he said. "Workers' compensation insurance rates are going down. The workers' compensation market is becoming more competitive. The potential for even greater savings is real as long as the reforms are given a chance to work and the Legislature avoids the false promise of price controls."