Workers’ Comp Rate Hike Recommended

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Workers’ compensation insurance rates in California should increase 23 percent next year, according to a recommendation made Wednesday by the governing board of the Workers’ Compensation Insurance Rating Bureau, an industry actuarial body.

The recommendation for the rate hike was sent to state Insurance Commissioner Steve Poizner, who rejected a comparable increase earlier this year. Poizner said that insurers could do far more to contain costs. Most companies increased their rates between 5 percent and 15 percent.

Today, Poizner said he would give the latest rate increase proposal close scrutiny before issuing his own recommendation later this year.

Since the workers’ compensation insurance industry was deregulated in the mid-1990s, the rating bureau sends its recommendation to the insurance commissioner and the commissioner issues his own, which is regarded as the final word from the state. Neither the bureau nor the commissioner can enforce their recommendations. But their opinions serve as guideposts for the industry.

In making its recommendation, the rating bureau said medical costs have been rising faster than insurers’ premiums. Also, the bureau factored in a 6 percent increase to deal with the expected impact of recent decisions by the Workers’ Compensation Appeals Board that remove some of the restrictive treatment guidelines set forward in the 2004 reforms to the workers’ compensation system.

However, in response to pressure from Gov. Arnold Schwarzenegger and Insurance Commissioner Poizner, the appeals board has agreed to review those decisions.

The Workers’ Compensation Insurance Rating Bureau is an industry actuarial research body whose board consists of representatives from the insurance industry, organized labor and employers.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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