Gino DiCaro

Workers' Comp. rate reductions continue

By Gino DiCaro, VP, Communications

Capitol Update, March 31, 2006 Share this on FacebookTweet thisEmail this to a friend

The Workers' Compensation Insurance Rating Bureau (WCIRB) has recently recommended an additional 16.4 percent Advisory Pure Premium Rate reduction for policies starting or renewing as of July 1, 2006. If the Insurance Commissioner accepts the WCIRB recommendation, it would be the 7th consecutive reduction in the Advisory Pure Premium Rate since 2003.

It would also be the third double-digit rate reduction in the past year, amounting to a 55 percent drop for the year. This is a clear indication that the reforms embodied in AB 227, Chapter 635, Statutes of 2003, (Juan Vargas, D-San Diego), SB 228, Chapter 639, Statutes of 2003, (Richard Alarcon, D-Sun Valley) and SB 899, Chapter 34, Statutes of 2004, (Charles Poochigian, R-Fresno) are working as they were intended.

Prior to these reforms California's workers' compensation costs were the highest in the nation while the benefits for injured workers were among the lowest. The legislature passed a series of reforms, prompted by an audible outcry from California employers and a pending ballot initiative. The reforms were thoughtfully crafted and provided improvements in the system for both injured workers and their employers whose businesses were suffering under the weight of bloated premiums.

Notable aspects of the reforms include:
  • A limitation on the number of chiropractic, physical therapy and occupational therapy visits allowed per claim.
  • The introduction of evidence-based medical guidelines and the implementation of utilization review to insure appropriate treatment.
  • The elimination of the costly and ineffective system of providing vocational rehabilitation and the creation of the supplemental job displacement voucher.
  • Incentives for both employers and employees to offer and accept a permanent modified position with the at-injury employer.
  • A shift away from subjective determinations of permanent disability and toward objective permanent disability awards based on the American Medical Association guidelines.
  • An adjustment to the rules governing apportionment of disability.
This year, the legislature has proposed roll backs on some of the recent reforms, such as the limits on chiropractic, physical therapy and occupational therapy. In addition to this, an organized public relations campaign has been launched to build pressure to revise the permanent disability rating schedule that has been the source of significant savings over the past year. Legislative rollback on any of these subjects will upset the market and raise concerns in the insurer and employer community about the longevity of reforms. Rate reductions could slow down as a result.
Capitol updates archive 989898989