NU Online News Service, July 8, 4:02 p.m. EDT
California Insurance Commissioner Steve Poizner, saying there is plenty of room for private insurers to cut costs, angrily rejected an industry request for a big hike in workers' compensation rates.
Mr. Poizner turned down a request by the industry-run Workers' Compensation Insurance Rating Bureau for a 23.7 percent increase in the Claims Cost Benchmark.
His decision, announced at a teleconference today, is advisory only and carriers can charge what they want provided it does not hurt their solvency, but he said that it was his hope that his decision will send a message to businesses to "really shop around" for coverage and will spur competition.
Mr. Poizner said his decision was based on hearings which revealed that large enterprises that self-insure were able to cut their costs by use of preferred pharmacy networks and better medical provider networks.
He said his department has identified 27 areas where private insurers can make savings. He said he will be appointing a cost advisory group from all stakeholders in the comp system to work at having insurers bring costs down.
Until he believes all available savings have been made, Mr. Poizner said he would not change his rate recommendation "by one dime."
At this point, he said, insurers on average are asking for comp rate increases in the low single digits. Mr. Poizner said he thought higher comp rates would increase unemployment because of the impact on small business.
The commissioner, a candidate for governor, said his decision may be called political, but he won't "let it get in the way of my doing the right thing."
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