NU Online News Service, May 20, 3:15 p.m. EDT–California Insurance Commissioner John Garamendi said the state's new permanent disability rules could reduce workers' compensation insurance premiums 20 percent or more, but warned the state urgently needs to fix a "data gap" in this new environment.
Commissioner Garamendi offered his comments to reporters after holding his Workers' Compensation Pure Premium hearing yesterday. The commissioner is scheduled to make his workers' comp advisory rate recommendation by late next week.
He noted that some labor leaders as well as some members of the Workers' Compensation Insurance Rating Bureau of California suggested a 20 percent cut for employers renewing policies on July 1.
Speaking to reporters in a conference call, Commissioner Garamendi observed that two packages of legislation–one by Gov. Gray Davis in 2003 and the subsequent bill signed by Gov. Arnold Schwarzenegger last year–have changed the workers' comp system dramatically in California.
The commissioner said that reforms enacted by Gov. Schwarzenegger last year are "now taking hold and are further reducing claims costs." But he cautioned it is unclear exactly how much more these reforms will contribute eventually in cutting costs.
The commissioner said one area in all this that urgently needs to be addressed is what he called the "data gap."
"Information that is reported to the Workers' Compensation Insurance Rating Bureau is dated information, not real time. Historical data is not useful," the commissioner said.
Mr. Garamendi said better mechanisms are needed to gather timely data on claims now being adjudicated so that regulators and legislators can better evaluate savings resulting from reforms.
"We have a situation in which the historic mechanisms to look at what's happening in workers' compensation costs is out the window. It doesn't work any longer," the commissioner said.
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