California's State Compensation Insurance Fund announced an average workers' compensation insurance rate reduction of 16 percent yesterday.
SCIP, which has half the California workers' comp market, is one of 39 insurers that have filed rate decreases in the last 18 days since California Insurance Commissioner John Garamendi called on insurers to implement a 15.3 percent decrease in the workers' comp pure premium advisory rate.
Mr. Garamendi said back then that insurers had cut rates just 26 percent since the state enacted reforms designed to save the comp system money. The cuts so far, he said, had been 10 percent less than he had recommended.
After the latest filings, Mr. Garamendi's spokesman, Norman Williams, said today that the commissioner's reaction was: "It's good, but more can be done. Information from insurance companies indicates that the 2004 cost reductions [from legislative reforms] were greater than anticipated. It's time for businesses to benefit from those reductions."
Mr. Williams said comp insurers' loss cost ratio in 2004 was 39 cents spent on benefits for injured workers of every premium dollar.
In addition, Zenith National Insurance Corp. in Woodland Hills, Calif., said that its subsidiary, Zenith Insurance Company, yesterday filed a workers' comp insurance average rate reduction of 13.1 percent.
The Zenith filing with the California Insurance Department is for use in the state on Jan. 1, 2006. The rate reduction is in comparison with rates in effect since July 1.
Commenting on the filing, Stanley R. Zax, Zenith chairman and president, said that "our rate decrease is in response to the favorable short-term trends in claim costs. We continue to be optimistic that our business strategy will provide favorable results."
Among the 37 other insurers that have filed for reductions the largest so far was for a 60 percent cut filed by Great American Insurance Company of New York under a new special class code rate.
Pure premium rate reductions were filed for at cut of 30.4 percent by Hanover Insurance Company percent and a drop of 29.2 percent by National Interstate Insurance Company.
A 19.4 percent reduction was filed by American Automobile Insurance Company, American Insurance Company, Associated Indemnity Corp., Fireman's Fund Insurance Company and National Surety Corp.
The smallest reduction filed so far was by Employers Compensation Insurance Company at 7.9 percent.
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