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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.

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.

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.

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