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Issues
Workers'
Compensation Reform
 January
25, 2008
Ontario Chamber
Fights Against Workers’ Compensation Rate Increases
The Ontario Chamber applauds California Insurance Commissioner
Steve Poizner’s recommendation earlier this week to not raise
the “pure premium advisory rates” for workers’ compensation
insurance beginning January 1, 2008. This will help insure that
reforms from 2004 continue to help businesses maintain stability
when dealing with the workers compensation system.
The Ontario Chamber continues to highlight the excessive
workers' compensation costs that result in the loss of jobs, the
closing of businesses, businesses moving out of the state and
out of Ontario, and businesses deciding not to locate in the
state and Ontario. In 2004, the legislature and Governor
Schwarzenegger worked together to reform the workers
compensation system. Those reforms are working.
“We commend the Commissioner in taking the right step in keeping
businesses competitive,” stated Bob Cruz, Chairman of the
Chamber’s GAC. “Workers compensation costs, although necessary,
were out of control and disruptive to businesses trying to make
a profit and stay in business,” continued Cruz.
Pure premium rates, which are set twice per year, reflect
expected losses and loss adjustment expenses on a statewide
basis for each industry classification, such as carpentry or
roofing. Pure premium rates are not binding, but provide a
benchmark for rates set by insurance companies. The state’s
largest insurer, the State Compensation Insurance Fund (“State
Fund”), announced earlier this week that its rates would remain
at the same level.
The Workers’ Compensation Insurance Rating Bureau (WCIRB), which
analyzes the system and recommends pure premium rate adjustments
to the Commissioner, had previously recommended a 5.2 percent
increase due to increased costs for administering claims and
recent legislation (AB 338) increasing costs for temporary
disability benefits. According to the WCIRB, “pure premium rates
for individual classifications will change (some higher and some
lower) based on the approval of new classification relativities.
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