There are costs intended and unintended; foreseen and unforeseen when government and the courts upset the balance of power.
The California Workers’ Compensation Insurance Rating Bureau’s Governing Committee has approved the recommendation to allow the pure premium rate in the state to rise by 29.6 perent, as was expected and widely reported.
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In a release announcing the Committee’s decision to make the 29.6-percent recommendation, the Bureau notes that even if an increase that large goes into effect, rates would still be about 53 percent lower than they were in 2004, at the peak of the market, when the state had an acute workers’ compensation crisis. Gov. Schwarzenegger reorganized the system in that year.
An employers group on Wednesday indicated that it would probably object to the 29.6 percent increase, but it knows some kind of a large increase must come, according to the Sacramento Bee newspaper.
Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, told the paper that a rate increase is warranted, although the 30 perent would be a dramatic increase for California employers.
Workers’ comp is a significant cost of doing business, and premiums reached something of a crisis point in California several years ago. Gov. Arnold Schwarzenegger signed an overhaul of the system in 2004 that brought premiums down more than 60 percent. Now premiums are starting to drift back up.
“We’re starting to see some trouble out on the horizon,” he said. “Certainly we’re not advocating big premium increases, (but) we’re reaching that point in time where rates are going to have to go up.”
The bureau’s recommendation sets up the latest version of a regular showdown between the rating bureau and Insurance Commissioner Steve Poizner, who has tried to jawbone insurers into keeping a lid on premiums.
Poizner will closely scrutinize the bureau’s latest recommendation, said his spokesman Byron Tucker.