Calif. Panel Okays Rate Regulation For Comp

The bill would create a three-member panel of the governor, the state insurance commissioner and the state attorney general, or their designees, that would establish a pure premium rate, adopt a uniform rating plan, and approve loss and expense multipliers.

Strong opposition to the measure has come from the insurance industry, which has argued that a rate regulation system would effectively negate the gains made in the state workers' comp market by legislative reforms passed in 2003 and 2004.

"Rate regulation is a diversionary tactic designed to deflect attention away from the fact that the historic reforms enacted last year are working and California's system is moving in the right direction," said Ken Gibson, vice president of the Western region for the American Insurance Association.

"We have gone from automatic double-digit rate increases to double-digit rate decreases. The reforms are taking hold and predictability and competition are returning to the system. On average, employers are seeing rates go down 16 percent. Now is not the time to politicize the rate-making process," said Mr. Gibson.

Additionally, Mr. Gibson noted that last year's reform bill covered the rate issue. "Last year's SB 899 mandated that a study be completed to evaluate the reform legislation's impact on rates," he said. "Any action taken before this study is completed is premature and unnecessary."

SB 46 now moves to the Senate Appropriations Committee. If it is approved there, it will be put to a vote on the Senate Floor and, if passed, sent to the State Assembly.