Calif. Commissioner Calls for Workers’ Comp Reform Savings to be Passed Through to Employers

California Insurance Commissioner John Garamendi released the following statement in regards to the recent agreement by Gov. Arnold Schwarzenegger and the Legislature for a workers’ compensation reform package:

“Today’s agreement on comprehensive workers’ compensation reform legislation is good news for California’s employers and its truly injured workers. Although it is not yet possible to quantify the amount of savings to be gained, it is clear that this legislation, along with last year’s reforms will substantially improve the way workers’ compensation works in California.

“Like many of you, I have been wary of rate regulation in the current environment, particularly in light of the status of the State Compensation Insurance Fund and the lack of competition in this market. Nevertheless, realizing that so many have made significant sacrifices to produce these system savings, I am convinced that we must do everything within our power to ensure that they are indeed passed on to employers. Earlier I offered a mechanism to ensure that this would be done. The language was written in a manner so as not to discourage competition from entering the market, and to bring more certainty to the pass through of savings,” Garemendi continued.

“Today, Assemblyman Juan Vargas (D-San Diego) has introduced a new bill that aims to accomplish this goal through a similar method. I would like to work with the Assemblyman for passage of this measure if it is precise enough to preclude manipulation of the pure premium analysis. Insurers must not be allowed to exploit technicalities that would result in savings going toward their profits instead of to employers. I am offering my assistance to the Committee in its efforts to craft effective language and address the concerns that its members have about getting the savings to employers.”

Topics California Legislation Commercial Lines Workers' Compensation Business Insurance