California Insurance Commissioner rejects workers compensation rate hike for the third time

Workers comp industry recently got shot down for their request of a 28% rate increase – citing higher medical costs and claims frequency on the rise. Steve Poizner, California commissioner, said “NO” for the third consecutive time, stating the industry is not justified due to a lack of legislative procedures ignored.

The Workers Compensation Insurance Rating bureau, an industry group, recommends higher rates for insurers due to recent court rulings that grant doctors more room to prescribe expensive treatments for injuries related to the workplace.

Governor Arnold Schwarzenegger has been behind the commissioner’s decision from the start. Both refer to the high unemployment rate, causing companies to shed workers, and/or even leave the state completely. Workers compensation insurance is required in the state of California by all employers.

Meanwhile, Poizner has required WCIRB to adhere to even a stricter review process. “The workers’ compensation rate-making system is long overdue for some much-needed reforms,” Poizner states. “The benchmark rate is only theoretical, and this has enabled insurers to file for and pass on rate increases to businesses. I will not allow this broken rate-making process to serve as cover for the insurance industry in its justification for higher rates that are simply not justified.”

In the mean time, Poizner’s rejection isn’t binding. Insurance companies will still request for rate increases, although they have learned from the WCIRB’s recommendation how hot the water really is, and will surely adjust their requests accordingly.

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