Garamendi Calls For Bigger Reductions In Workers' Comp Insurance Rates
By Associated Press - June 5, 2005SACRAMENTO (AP) _ State Insurance Commissioner John Garamendi called for bigger price cuts in workers' compensation insurance Wednesday, saying the cost of claims should drop another 18 percent next month.
"My message to the workers' compensation industry today is this: Reduce your premiums now (and) pass the historic cost reductions on to every business in the state,'' Garamendi said.
Garamendi issued his latest pure premium advisory rate, his estimate of the cost of paying benefits and processing claims, which doesn't include profits, overhead, taxes, commissions and other costs. But the estimate often serves as a benchmark to determine what most employers pay.
With Wednesday's announcement, Garamendi concluded that claim costs have dropped 36.5 percent since 2003, when the Legislature began adopting a series of bills to cut the cost of treating job-related injuries.
But so far workers' comp insurers have reported that claim costs dropped 17 percent in that same period, and some employers have seen insurance rates increase, Garamendi's office said.
That has prompted claims by groups representing injured workers that insurance companies are making excessive profits and triggered efforts by some Democratic lawmakers to require state regulation of workers' comp insurance rates.
A bill by Sen. Richard Alarcon, D-Van Nuys, would create a commission made up of the insurance commissioner, governor and attorney general to make sure insurers' rates aren't excessive. It's awaiting a vote in the Senate.
California's biggest workers' compensation insurer, the nonprofit State Compensation Insurance Fund, announced that it would cut its rates an average 14 percent on policies sold or renewed starting July 1.
The cut will mean that the quasi-governmental fund will have slashed its rates 26.2 percent since the end of 2003.
A spokesman for the fund, Jim Zelinski, said the fund's managers carefully consider Garamendi's recommendations in setting their rates, but also conduct their own analysis of their expenses.
"We always think we set responsible rates," he said. | 
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