State Insurance Commissioner Steve Poizner on Wednesday recommended no change to workers compensation rates for California businesses early next year, bucking a call for a 4 percent increase.
Poizner's move marks the first time in four years that an insurance commissioner has not recommended a decrease in workers compensation premium rates following the passage of sweeping reforms in 2003 and 2004. It comes at a time when industry watchers and analysts believe that the market has bottomed out.
Over the last four years, workers compensation premiums have fallen an average of 55 percent, thanks to robust competition among insurers. But claims costs have remained stubbornly high, prompting the quasi-public California Workers' Compensation Insurance Rating Bureau in September to recommend a 4.2 percent increase in base premium rates, effective with policy renewals on or after January 1, 2008.
In choosing not to go along with the rating bureau's call for a rate increase, Poizner cited figures compiled by his department showing that costs to insurers have plummeted 70 percent during the last four years. "This represents a tremendous savings that should allow insurers to give businesses additional relief in the form of lower rates," he said.
Under reforms enacted in the mid-1990s, the insurance commissioner can only recommend that carriers adjust their rates. However, insurers have generally used the commissioner's twice-yearly recommendations as their benchmark for setting rates. On Monday, the state's largest carrier, the State Compensation Insurance Fund, announced it was holding its rates steady.
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