State's biggest insurer cuts workers' comp rates 7 percent (as opposed to from 21% to 30%)

Associated Press ^ | June 4, 2004 | TOM CHORNEAU

[Amerigomag]

SACRAMENTO (AP) - In a major disappointment to small business owners, lawmakers and Gov. Arnold Schwarzenegger - the state's dominant workers' compensation insurer said Friday their rates will drop only 7 percent next year. That's far below the 25-to-30 percent that many hoped reform legislation would bring.

Vince Sollitto, a spokesman for the governor, said the administration is not looking at the news as a setback. He pointed out that major elements of the reform bill have yet to be enacted and that Schwarzenegger's savings estimate was for the longer term.

Insurance Commissioner John Garamendi said last week that workers' comp rates should be cut an average of 21 percent. In a statement Friday, Garamendi promised to review the rate plan to make sure all the savings are being passed on to employers.

"This is disappointing, but I understand the historical financial issues that State Fund faces," he said. "Nevertheless, as required by law, my Department will analyze this filing to determine whether all of the available savings are indeed being passed on

[Amerigomag]

This new rate comes as a surprise to no one. The surprise to both the Austrian prince and the Legislature is that a liberal wire service would dare print the truth, albiet on a Friday afternoon.

The state's Chief Legislative Analyst predicted a 3% reduction in premiums.

The real irony is that the lions share of the savings and consequent reduction in premiums are the result of a substantial reduction in charges that physicans and hopitals are able to bill for care incured at "surgical centers". These reductions were codified under the Davis administarion and implemented on January 1.

[babygene]

My software company has employees in Idaho (good thing it's not CA). I was chatting with an underwriter with the state insurance fund today, and was amazed at some of the things I learned.

First of all, in our business (software engineering), the workman's comp. rate is very low... $.35 per hundred dollars of payroll. (that's 35 cents)

How many of you would believe though, that in the roofing industry the rate is $40 (yea, that's right forty dollars) for every hundred dollars of payroll. Even worse are umpires for sports teams... Over $50 per hundred dollars of payroll.

A house painter, $7 per $100. This blew my mind. I would never have guessed it was so high. No wonder it cost so much to get your roof fixed!

[John Jorsett]

How many of you would believe though, that in the roofing industry the rate is $40 (yea, that's right forty dollars) for every hundred dollars of payroll. Even worse are umpires for sports teams... Over $50 per hundred dollars of payroll.

I've heard that for roofers in CA it's over $100 per $100. I don't want to think what a new roof is going to cost me one of these days.

[Reeses]

At that level roofing work might be a good candidate for being done by robot. If built with a wireless internet connection and web cam, the robot supervisor could stay in Mexico with his family.

[LibertyAndJusticeForAll]

There was also legislation passed recently making it a little more difficult for the more frivolous/fraudulent lawsuits; which should help business.