[California] State proposes workers' comp rate increase

San Francisco Chronicle ^ | Aug 16, 2008

[John Jorsett]

Workers' compensation has been a bright spot for cost-conscious California businesses in recent years, with rates dropping 65 percent since 2003.

Those days may be over.

The Workers' Compensation Insurance Rating Bureau filed a proposal Friday for a 16 percent increase in the pure premium rate, an advisory figure used by insurance companies in determining how much to charge employers.

Bureau officials said that most of the proposed increase comes from rising medical costs related to workers' comp claims.

"Medical costs were declining for several years in a row due to the workers' comp reforms that went into effect in 2004," said Jack Hannan, a spokesman for the bureau. "This increase is primarily based on increasing medical costs for claims from the years 2006 and 2007."

The proposed 16 percent boost doesn't mean that every California business will see an increase of that amount - or any amount.

First the California Department of Insurance must hold a hearing on the proposal on Sept. 15. Then Insurance Commissioner Steve Poizner has about 45 days to either accept or modify the proposal. (Poizner turned down a proposal by the bureau for a 4.2 percent increase last winter.)

Finally, once the new rate takes effect in January 2009, insurance companies can choose whether or not to apply it to their own customers.

"I wouldn't expect everyone to file a 16 percent increase," said Hannan. "We'll see numbers all over the map."

But even if companies don't raise their rates immediately, the proposed increase is a signal that the days of plummeting workers comp' costs are probably over.

[A CA Guy]

I’m sure false claims and trial lawyers have nothing to due with the cause of this.

[A CA Guy]

I’m sure false claims and trial lawyers have nothing to due with the cause of this.

[Myrddin]

Another reason for businesses to be looking for a new home outside California. Workers comp and electricity rates were two key factors that moved the Buck knife company out of El Cajon, CA and back to their roots in Idaho.

The skyrocketing electric rates around 1999 had a very clear impact on parking lot and office occupancy at my employer in San Diego. Before the rate increases, the main parking lots were full by 8 AM and satellite lots were nearly full by 8:30 AM. After the rate increases, you could come to work any time of day and find plenty of parking. Inside, the fluorescent lamps were pulled to minimum safe lighting and air conditioning was set for 80 F. It was dark, stale and hot in the office. That was reason for me to work from home most of the time and ultimately to make my home in Idaho.

My employer wasn't doing any less business. The work was simply reshuffled to company locations in other states. It was the California offices that were losing business as they could not compete with rates in less costly states.

[fantom]

The pigs are at the trough . Think of the billions in revenue that pours into this state , and they still can’t keep a budget.

[patton]

Look for HQ to move to VA.

[A CA Guy]

Let me give you a small idea of how messed up in the recent past our state workers comp process was.

Just a few years ago, any worker who wanted to could put themselves on disability without even a doctor.
That was changed only in the last few years.

We also have a weaker dollar and as medicine costs more, care costs more. So insurance or a fund costs more.

I think if we could somehow remove the cheaters, overpricing, stupid lawsuits and lawyers the cost could go considerably down. Maybe could even go down to a third!

[autumnraine]

Wow, great way to continue to force businesses out of California. Most carriers are already not insuring in California due to the outrageous Work Comp laws on the books there, and the rates in California are some of the highest in the nation. Alot of companies are moving just across the border to other states.

Yeah, raise the rates and kill what businesses you have still there.

[Myrddin]

Look for HQ to move to VA.

I think the writing is already on the wall for that. The dependence on federal contracts makes it critical to have the brass close to the source of funding. The last work in did in San Diego that needed to be there was some communications device driver work over at SPAWAR. I knocked that out in about 10 hours.

[patton]

Ayep.