[Source: Los Angeles Business Journal] California Insurance Commissioner Dave Jones is urging insurance carriers in the state to cut the workers compensation premiums they charge employers by 14 percent.
Thursday Jones lowered his suggestion for the average premium rate to $2.19 per $100 of employer payroll, which represents a 14 percent drop on average from premium rates insurance companies have filed with his office, and a 5.5 percent drop from Jones’ mid-year rate recommendation.
Jones said that carriers have not been passing on to employers savings in the workers’ compensation system brought about by legislative reforms in 2012 and 2013.
“Insurers’ net costs in the workers’ compensation system continue to decline as a result of SB 863 and other reform laws enacted by the Legislature and Gov. (Jerry) Brown, which is good news,” he said. “Workers’ compensation insurers should pass these cost savings onto employers, but there is no legal requirement that they do so, and workers’ compensation insurers continue to file pure premium rates that are higher than the pure premium rate warranted by their costs.”
Earlier this year, Jones recommended that for policies beginning on or about July 1, carriers lower their premiums 10 percent from the rates they filed with his office. But, Jones said, many insurers chose not to lower their premiums.
California’s workers’ compensation system was partially deregulated in the 1990s, allowing insurers to set their own premium rates. Insurers still must file their rates with the insurance commissioner’s office, but the insurance commissioner does not have veto power over premium rates; he can only recommend rate levels.
Up until recently, insurers tended to follow the insurance commissioner’s recommendations. But insurers’ assessments of overall market conditions and concerns about rising health care costs generally have resulted in some choosing to disregard the commissioner’s calls to reduce premium rates.
Source: Los Angeles Business Journal
October 28, 2016