California Insurance Commissioner Steve Poizner is urging insurers to hold the line on workers’ comp insurance rates for 2008.
Poizner really only has a bully pulpit. Twice a year he issues an advisory rate, which insurers can ignore.
This one runs counter to the Workers’ Compensation Insurance Rating Bureau, which proposes a 5.2 percent rate increase in the coming year to offset higher costs of handling claims and cover a new law that extends the eligibility period for employees on temorary disability.
In line with Poizner’s request, the 800-pound gorilla in this arena, the State Compensation Insurance Fund that writes 23 percent of WC policies, has said it will not change its rates on new policies and renewals after Jan. 1.
Since 2003 reforms, California’s workers’ comp insurers have cut their rates a total 55 percent. Poizner says they should cut rates even more because the cost of benefits and medical treatment have dropped 70 percent in the past four years.
Here’s Poizner’s press release and his office’s decision and order.
Poizner is critical of the Rating Bureau data he has been given, because his background in engineering has led him to expect accuracy in data. He sees the past information from the Rating Bureau as too high recently and too low in the 90’s, but always wrong. Since the Bureau has talked about changing its methods but has not done so, it is not surprising that Poizner has not accepted their rate increase recommendation.
Employers should ask their brokers about their own policies and how their rate quotes are calulated. Don’t just accept what they are being offered, ask questions.
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