November 30, 2007
Regional Business Community Continues the Fight Against
Rising Workers’ Comp Rates
The regional business community applauds California
Insurance Commissioner Steve Poizner’s recommendation late
last year not to raise the “pure premium advisory rates” for
workers’ compensation insurance beginning January 1, 2008.
The Temecula Valley, Murrieta and Lake Elsinore Valley
Chambers continue to highlight the excessive workers'
compensation costs that result in the loss of jobs, the
closing of businesses, businesses moving out of the state
and out of the region, and businesses deciding not to locate
in California and locally. In 2004, the legislature and
Governor Schwarzenegger worked together to reform the
workers compensation system. Those reforms are working.
“We want our business community to know we are protecting
their interests and this is a significant recommendation
concerning workers’ compensation rates,” stated Kim Cousins,
President and CEO of the Lake Elsinore Valley Chamber. “The
businesses, along with job growth, will be negatively
impacted if workers’ comp rates rise and we applaud the
Commissioner for his recommendation,” Cousins continued.
Pure premium rates, which are set twice per year, reflect
expected losses and loss adjustment expenses on a statewide
basis for each industry classification, such as carpentry or
roofing. Pure premium rates are not binding, but provide a
benchmark for rates set by insurance companies. The state’s
largest insurer, the State Compensation Insurance Fund
(“State Fund”), announced earlier this week that its rates
would remain at the same level.
The Workers’ Compensation Insurance Rating Bureau (WCIRB),
which analyzes the system and recommends pure premium rate
adjustments to the Commissioner, had previously recommended
a 5.2 percent increase due to increased costs for
administering claims and recent legislation (AB 338)
increasing costs for temporary disability benefits.
According to the WCIRB, “pure premium rates for individual
classifications will change (some higher and some lower)
based on the approval of new classification relativities.”
The Commissioner’s announcement comes after eight
consecutive pure premium rate reductions since 2003.
According to the Department of Insurance, insurer rates have
decreased by 55 percent since 2003 as a result of recent
legislative reforms.
August 10, 2007
Regional Business Community Fight Against Workers
Compensation Increases
The Temecula Valley, Murrieta, and Lake Elsinore Valley
Chambers of Commerce continue to fight proposed legislation
that would allow for workers’ compensation increases. A
pending job killer in the Legislature, SB 942, would create
new requirements for employers when an injured employee
returns to work. This would add to the costs of workers
compensation, which California saw spiral out of control
three years ago.
Click
here to take action on SB 942.
“By allowing this piece of legislation to pass, it will set
California’s businesses backwards when it comes to workers
comp,” stated Kim Cousins, President and CEO of the Lake
Elsinore Valley Chamber. “California and our businesses
have come too far to allow this,” continued Cousins.
Current law protects employees from discrimination based on
their workers’ compensation claims. SB 942 would create an
assumption that an employer has discriminated against the
employee if the employee was not returned to work with full
pay and benefits within one day of the employee being
released to full duty.
SB 942 also changes the timeframe of which supplemental job
displacement vouchers are distributed. SB 942 will revert
the workers’ compensation system back to the days of high
premiums and will ultimately have businesses pay for the out
of control costs it mandates. This is the wrong direction
for Temecula Valley businesses and employees.
February
13, 2006
Fighting to Reform
California's Workers' Compensation System
Plagued by skyrocketing
costs and widespread conflict, California’s workers’
compensation was a system in crisis. The harmful impacts on
employers and workers alike drove the need to reform
California’s broken system. Lawmakers responded by enacting
a series of reforms, culminating in the comprehensive reform
proposal championed by Governor Schwarzenegger in 2004.
This
legislation, Senate Bill 899, was crafted to address many of
the core issues plaguing the system by:
- Reducing
the high incidence of unnecessary and costly litigation
- Producing consistent and predictable outcomes for disabled
workers and encourage return to work
- Improving medical treatment using proven methods of
delivering quality care affordably and expeditiously
- Ensuring that injuries directly result from employment and
benefits reflect degree of causation related to the injury
Passage of SB 899 was just the first step,
and the three Chamber's
area working to ensure that the legislation is implemented as
intended and not undone by reform opponents. Most of the
administrative regulations required to turn SB 899 into
actual system change have been adopted by state regulators,
but some additional regulations are still needed. Meanwhile,
reform opponents — primarily those who profited from the
conflict, uncertainty and subjectivity of the old system —
are challenging many of the key reforms in court and the
Legislature.
The Workers’ Compensation
Insurance Rating Bureau (WCIRB) has estimated that recent
legislative reforms will reduce workers’ compensation system
costs by several billion dollars. Cost savings have already
translated into significant reductions in workers’
compensation insurance premiums paid by California
employers, with more reductions in the pipeline. Meanwhile,
competition among
insurers is increasing.
Realizing the full cost savings
from reform is critical to both public and private
employers, as well as California’s economic future. Savings
for local government mean more resources for public safety
and infrastructure. Savings for schools mean more resources
for teachers, textbooks and facilities. Savings for
businesses will help employers create jobs, provide raises
and benefits and keep their operations in California.
February 3, 2006
Legislative
Update: Workers’ Compensation Legislation Back in 2006
In September 2005, Governor Arnold Schwarzenegger finalized
his action on the bills passed by the California Legislature
during the first year of the 2005-2006 legislative session.
When measures where first introduced at the beginning of the
2005 session, over four dozen workers’ compensation bills
were introduced. Although most of these bills focused
altering the reforms mandated by legislation passed in 2003
and Senate Bill 899, there were several measures that would
reinforce and strengthen California's workers'
compensation.
On October
7, 2005, none of the proposed workers’ compensation
legislation was passed by the Legislature nor signed by
Governor Schwarzenegger. California legislators, Assembly
Speaker Fabian Nunez, and the Governor concluded that
further improvements should be saved until the most recent
measures have had time to fully infiltrate the system.
Despite
the unanimous waiting period, the following four bills will
create another stumbling block for California’s workers'
compensation system: AB 1549 (Koretz), SB 46 (Alarcon), SB
538 (Kuehl) and SB 1023 (Dunn). First, AB 1549 will allow
chiropractors and acupuncturists to become Independent
Medical Reviewers. Second, SB 46 will impose a rate
regulation scheme on workers' compensation insurers that
will reduce the increasing competition in the workers'
compensation insurance market currently helping to bring
down costs for employers. Next, SB 538 will place burdensome
restrictions on the new Medical Provider Networks
established by SB 899. Finally, SB 1023 will enforce a
redundant penalty structure that was previously revised
within SB 899. SB 1023 was vetoed by Governor Schwarzenegger
after passing the Legislature.
On the other hand, there are two bills that will provide
further savings for employers. SB 178 (Poochigian) will cut
the red tape for medium-sized employers forming
self-insurance pools as a way of reducing their workers'
compensation costs. The other measure, SB 292 (Speier), will
save employers money by closing a loophole that allows
medical providers to repackage drugs for sale a huge
mark-ups.
Now that the Legislature is back as of the first week of
January, there are a few legislative agendas to watch.
First, Assembly Speaker Nunez expressed an interest during
the 2005 session to research a more "comprehensive" workers’
compensation reform. The Speaker is expected to propose
changes to the new permanent disability rating system that
was enacted January 1, 2005. Additional legislation with
goals to diminish employers’ savings resulting from SB 899
will be proposed by the California Applicants' Attorneys
Association (CAAA) during the 2006 legislative year. The
final to watch in 2006 is the costs of the workers’
compensation system. Most of the reform measures passed in
2003 will have penetrated the system allowing legislators
the time needed to determine how well the system is working
for both employers and injured workers.
With many bills shelved and many agendas proposed in 2005,
there will be many workers’ compensation issues to take
action on during the 2006 legislative session.
January 2006
State of California Releases Study of the Effects of the
2004 Legislative Reforms on California Workers’ Compensation
Insurance Rates
Primarily due to
the legislative reforms of 2004, the State of California
projects that the approved insurance rates have decreased by
46% (from average rates of $4.81 per hundred dollars of
payroll to $2.59 from July 1, 2003 to January 1, 2006 (a
three year period). Rates are now below where they were in
1996. These rates have been adjusted for changes in the mix
of payroll by industry.
Click here to download the report.
June
18, 2005
Workers' Compensation Rates
Continue to Decline
Recent recommendations of double-digit workers' compensation
rate reductions are the result of the reforms that passed
last year beginning to take hold. New guidelines have
brought California's standards closer in line with those
used by the rest of the nation and are helping keep costs
down. The best way to restore competition, and provide
much-needed relief to small businesses, is to see that last
year's workers' compensation overhaul is fully implemented.
Rate Recommendations Indicate Further Relief
Twice a year, the Insurance Commissioner recommends workers'
compensation rates - known as the "pure premium advisory
rate" - as a target for insurance premiums. On June 1, the
Insurance Commissioner announced his pure premium rate
recommendation reduction of 18% for workers' compensation
policies written after July 1. The Workers' Compensation
Insurance Rating Bureau (WCIRB), the designated statistical
agent of the Insurance Commissioner, recommended a 13.8%
rate reduction. The cumulative rate reduction recommended by
the Insurance Commissioner is 36%, while the cumulative
WCIRB rate reduction recommended since reform is 33%.
While the Commissioner's pure premium rate is merely
advisory, California insurers submit their actual rate plan
to the Commissioner for his approval. The Commissioner has
approved insurance rate plans with an average rate reduction
of 17% between 2003 and January 2005, despite the fact that
his pure premium rate recommendations totaled 22% (see chart
below).
Note: Average Insurer Rate Changes for 7/1/05 and the
Cumulative Average Insurer Rate Change will be available at
the end of June.
Insurance Commissioner Approves an Average 14% SCIF Rate
Reduction, 4% Less Than His Pure Premium Advisory Rate:
The insurance Commissioner has also approved a rate
reduction plan for the State Compensation Insurance Fund (SCIF)
which will provide an average 14% reduction for new or
renewing policies as of July 1. The SCIF plan also includes
an average 3.8% rate reduction for already in-force policies
and a new safety credit for small employers. State Fund
rates will be down 26.2% overall since the workers'
compensation overhaul began two years ago.
Other Insurers File Rate Reductions:
To date, carriers have filed rate reductions of 10.4% to 18%
for their July 1, 2005 rate filing. These rate reductions
are pending before the Insurance Commissioner and if
approved, would apply to new or renewing policies beginning
July 1, unless otherwise noted.
The impact of rate reductions on individual policyholders
will depend on when they last renewed their policies and
their own experience rates. For policyholders renewing after
July 1, their rate will include the January 1, 2005 and the
proposed July rate reduction adjusted for their own
experience ratings.
Reclassification or Inappropriate Action Could Slow Rate
Reductions:
Some employers have expressed concern that despite approved
rate reductions, their individual rates have not gone down.
If employers feel that their employees have been
inappropriately reclassified or they have seen other changes
to their policies that they believe have incorrectly
affected rates, they may seek assistance from the WCIRB
Ombudsman. The Ombudsman is there to assist policyholders
with obtaining and understanding information about their
insurance.
Click here to email contact
us for more information
