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California Insurance Commissioner Surprises On Increase

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California’s Insurance Commissioner Says Zero Increase

California Insurance Commissioner Steve Poizner today recommend a 0% rate increase for advisory rates effective July 1, 2009. I was expecting the Commissioner to recommend a 7% – 10% rate increase. The reasons for the recommendation are not that surprising. The amount was the shocker.

Picture of Steve Poizner Insurance Commissioner California
Wikipedia – California Department of Insurance

The Workers Compensation Action Network (WCAN – of which I am a member) covered the Commissioner’s reasoning. The commissioner entirely rejected the 23.7% average rate increase recommended by Workers’ Compensation Insurance Rating Bureau (WCIRB) in March, which it based on increasing medical costs and higher permanent disability costs expected to result if recent court decisions (Almaraz-Guzman and Ogilvie) are not overturned on appeal.

The commissioner said although medical inflation is increasing, he believes that certain cost-containment tools enacted by recent legislative reforms are not being adequately utilized and does not plan to increase his benchmark rate until all “avoidable” costs are addressed. To address these, the commissioner also released a list of 27 recommendations for increased system efficiency, including new efficiencies from medical providers.

I had to find out what the recommendations were for increasing efficiency by the Commissioner. I will add them in as a post tomorrow. It is 9 pages long including a few surprising angles. Another factor is a 23.7% increase may have been the “death blow” in an extremely fragile business environment for many employers. However, a 0% increase could cause future problems. I will cover that possible problem in the next few days.

Why is CA so important? California’s Workers Comp system has been the bellwether for the nation’s future Workers Compensation market.  California’s rules and regs seem as though other states follow their lead in Workers Comp.  The California Insurance Commissioner proved his department’s importance with this decision. 

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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