California Insurance Commissioner Steve Poizner yesterday called for an additional 14.2 percent decrease in workers' compensation pure premium rates.
In addition, he announced a variety of administrative moves designed to review and improve the state's comp system.
The commissioner's advisory rate recommendation is used by the workers' compensation insurance industry as a benchmark for filing its rates.
Mr. Poizner said that after reforms put in place three years ago, workers' compensation insurers are "reaping tremendous benefits" from recent reforms to the system, currently enjoying historic record-low loss ratios of 37 percent.
"Costs for insurers have dropped sharply, fueling an extremely healthy market driven by historic and unprecedented cost savings," he said.
Nicole Mahrt, regional manager for the American Insurance Association, said that carriers have been reducing rates by up to 60 percent due to the impact of reforms.
"Insurers will have to take the commissioner's recommendations and apply them to their own book of business and consider their own expense and reserving needs," she said.
Mr. Poizner also announced he has ordered a top-to-bottom audit of the state Workers' Compensation Insurance Rating Bureau (WCIRB) to improve its data collection and forecast development, saying there were unacceptable "systemic inaccuracies in the rating process."
He also ordered market conduct exams of insurers to verify if benefits to injured workers are delivered promptly.
Mr. Poizner directed WCIRB to develop a plan to overhaul its experience rating system, which examines an employers' claims history for safety and loss prevention efforts, noting it has gone unmodified for 12 years. He said this will give businesses proper incentives to improve workplace safety.
To encourage expansion and increase competition, the commissioner said he will host a Workers' Compensation Summit that will highlight expansion opportunities in the state and examine how to provide continuing stimulation to the workers' comp insurance market.
To deter illegal activity and further lower costs, the commissioner said he has formed a blue-ribbon Advisory Task Force on Insurance Fraud to study and determine the most effective ways to fight workers' comp fraud.
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