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Insurance Commissioner John Garamendi Announces a Workers' Compensation Rate Decrease
Speaking to the California Coalition on Workers’ Compensation Insurance Commissioner John Garamendi announced a 14.9 percent decrease in the advisory pure premium rate effectively returning it to the July 2002 level.
Garamendi has clearly decided to set the bar and wait for the insurance industry and the State Compensation Insurance Fund (SCIF) to respond. When questioned about the disparity between his advisory rate and the recommendation of the WCIRB for a 2.9 percent and 5.3 percent reduction in rates, Garamendi reminded the audience the WCIRB was an insurance industry dominated group. He also said they discounted the value of the medical utilization reforms fearing that insurers could not implement them. Garamendi made it clear he is confident he is standing on solid financial estimates and is prepared to use his authority to implement reforms and achieve the cost savings.
Garamendi challenged insurers and SCIF, in particular, to make every effort to implement the medical utilization reforms. He promised the American College of Occupational and Environmental Medicine’s (ACOEM) guidelines would be published by January and insisted that insurance companies must adequately train their adjusters to use the new treatment guidelines and in April, begin paying medical providers based only on those new guidelines. He also urged the Legislature to enact clean up legislation to avoid litigation that could stall implementation of the reforms. Finally, he urged Gov.elect Schwarzenegger to call a special legislative session to start Nov. 18. He advised Schwarzenegger to put a deadline on the session of March 2004 to keep pressure on the Legislature to stay focused on reform.
The commissioner acknowledged in his press advisory his advisory rate is only a benchmark. But he also said that while he does not have the power to set the rates charged to employers, the reform legislation includes a provision that requires insurers to file rates that reflect the savings that the commissioner determines are due to the reforms.
Gararmendi presented the importance of his efforts in the context of the state’s economy. “Since it’s mandatory, workers’ comp rates amount to a tax on the economy. If the $20 billion increase in comp rates had been available as tax revenue to Gov. Gray Davis, he might not have been recalled,” speculated Gararmendi, adding, “I’m sure Gov.-elect Schwarzenegger would love to have $20 billion in tax revenue.”
For more information on this subject, see this link to The Insurance Journal.
Calififornia Commissioner Unveils Second Phase of Reform Plan
last updated: November 7, 2003
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