Workers' Comp Rate Hike Whac-a-Mole

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By Julius Young

I love arcade games.

Show me a skeeball machine and I'm a happy camper. It's worth the drive to the Santa Cruz Boardwalk just for that.

Pac Man? Say no more. A good pinball machine is heaven. Table shuffleboard? Spent many hours playing at a local Oakland watering hole, The Kingfish.

But a good game of whac-a-mole is difficult to beat.

California Insurance Commissioner (and GOP gubernatorial candidate) Steve Poizner continues to play a good game of whac-a-mole.

Today comes his announcement that he is AGAIN denying the Workers Compensation Insurance Rating Bureau's request for a hike in comp insurance rates. The Workers Compensation Insurance Rating Bureau had recommended a 22.8% rate increase, effective January 2010.

Whether politically tinged or not, it's a stunning rejection of the insurance industry's attempt to justify higher comp rates. Poizner continues to believe that the industry has not made the case for increasing rates.

The industry and WCIRB has been pushing for an increase in the recommended "pure premium rate". That rate, set by the Insurance Commissioner, is not binding on carriers but does set a tone for the industry and is watched as a barometer of trends in the industry.

Poizner was not about to be stampeded by unsubstantiated fears that the recent Workers' Compensation Appeals Board decisions in the Almaraz/Guzman and Ogilvie cases would create major systemic cost increases. He noted that there were differing assessments of the impact of those decisions and lack of actual data to back up the claim that those decisions would have a major impact on comp costs.

Poizner's refusal to endorse an upward adjustment to comp rates due to Almaraz/Guzman and Ogilvie would perhaps appear to take some wind out of the sails of those stakeholders who have recently negotiated behind closed doors to reverse Almaraz/Guzman (by changes to Labor Code 4600 (b)(1)) and Ogilvie (by changes to Labor Code 4600(b)(1)) in exchange for other systemic changes. If the Insurance Commissioner does not believe the case has been made, it may be a hard sell to convince Democratic Party politicians to get aboard a train which would shut the door on Almaraz/Guzman/Ogilvie arguments in the fashion envisioned in the draft that the California Commission on Health and Safety and Workers' Compensation just released.

Assembly and Senate Democrats who are mindful of the interests of injured workers will want to carefully scrutinize the sort of approach that was being brokered with the help of Commission on Health and Safety and Workers' Compensation staff. More data on the effect of the Workers' Compensation Appeals Board decisions will need to be gathered before disabled workers can be asked to endure more takeaways.

Poizner believes that the insurance industry is not doing enough to control costs or increase efficiency.

Here's Poizner's statement:
http://www.insurance.ca.gov/0400-news/0 ... 171-09.cfm

Poizner noted that the pure premium cost benchmark is down 63.4% since its high in 2003.

It's worth keeping in mind that payments to or on behalf of injured workers have been less than half of premiums paid since the 2004 reforms. That figure was noted by UC Berkeley Professor Frank Neuhauser in a recent presentation to the Commission on Health and Safety and Workers' Compensation. Neuhauser noted that "using detailed data on California workers' compensation insurance we calculate that the administrative overhead accounts for 50-60% of premiums":
http://www.dir.ca.gov/chswc/Reports/200 ... n_2009.pdf

The actual Poizner rate filing decision can be accessed here:
http://www.insurance.ca.gov/0400-news/0 ... 091109.PDF

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Starting in 1979, Julius Young has represented thousands of individuals who have sustained life-changing injuries or illnesses while on the job. A partner of Boxer&Gerson since 1988, he practices workers’ compensation and disability law in Oakland. This article originally appeared in his blog  workerscompzone.com. It is republished with his permission.