Workers’ compensation rate regulation bill passes out of first committee

By CMTA Staff

Capitol Update, April 15, 2005 Share this on FacebookTweet thisEmail this to a friend

A bill to regulate workers’ compensation rates, SB 46 by Sen. Richard Alarcon (D – Sun Valley), passed with a party line vote (5-3) out of the Senate Labor and Industrial Relations Committee on Wednesday, April 13th.  Under this bill, carriers would need the approval from a commission of the Governor, Attorney General and the Insurance Commissioner to set rates.

The bill is intended to force insurers to pass on savings in the system to premium payers.  However, CMTA believes the bill could stifle competition and result in higher premiums.

Since the Division of Workers’ Compensation started implementing last year’s reforms, California has seen decreased rates and more competition in the market. There is still a long way to go before the reforms are fully implemented and data is available to prove how the market is performing.  It is too early to render judgment that insurance companies are withholding savings.  Imposing regulated rates and "political pricing" could chill the market and hurt both businesses and their employees.

SB 46 will be heard next in the Senate Appropriations Committee.

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