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.
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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