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Garamendi to Press Worker Comp Rates

The state insurance commissioner says he plans to seek an additional 6.3% cut in premiums in January.

September 29, 2006|Marc Lifsher | Times Staff Writer

Insurance Commissioner John Garamendi said Thursday that he expected to recommend that insurance companies cut workers' compensation premiums by an additional 6.3% in January.

The proposed cut would be the latest in a series of premium reductions after a 2004 legislative overhaul that stripped billions of dollars from the cost of the state's program for helping injured workers.

The recommendation, if followed by insurers, would reduce the costs underlying premiums by a cumulative total of 58% since the middle of 2003, Garamendi said at a hearing in San Francisco.

"The success of these reforms is unprecedented," he said, referring to laws passed in early 2004 and late 2003. "No other state has enacted reforms that reduced workers' compensation costs to this degree."

Gov. Arnold Schwarzenegger has praised the overhaul for boosting the economy by slashing premiums paid by employers that as much as tripled from 2000 to 2003.

"The rates were absurdly high," said Martyn Hopper, state director of the National Federation of Independent Businesses.

But lower rates are not enough to completely fix the system, Garamendi warned.

He said the 2004 law needed to be adjusted to restore permanent disability benefits that had been cut by as much as 50% for seriously injured workers. Schwarzenegger recently vetoed a bill that would raise those benefits. The bill had been backed by labor unions.

The commissioner's recommendations, though not binding, are viewed as key guidelines and are generally followed by individual insurance companies, said Sam Sorich, president of the Assn. of California Insurance Cos.

"This will further improve the competitiveness of the marketplace, and it's good news for the consumers of workers' compensation insurance," Sorich said.

Insurers are open to fine-tuning the 2004 overhaul if future studies show workers are getting hurt, Sorich said. "If there is evidence, then I believe there will be a willingness by all participants to make appropriate adjustments," he said.

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