ACIC’s Fuller Comments on Workers’ Comp Reform

Jeffrey Fuller, executive vice president and general counsel for the Association of California Insurance Companies, released the following statement in regarding workers’ compensation reform:

In 2003, the legislature took a major step in reforming California’s broken workers’ compensation system by enacting multifaceted reforms that have the potential to produce billions of dollars in savings for employers. In 2004, another major step is necessary to assure continued progress in transforming the workers’ compensation system to an effective and efficient mechanism for serving injured workers.

The Association of California Insurance Companies (ACIC), an affiliate of the Property Casualty Insurers Association of America, believes that reforming this complex and convoluted workers’ compensation system is a task best performed through the legislative process. ACIC will work with all involved to help achieve that goal.

But, failure to achieve substantial reform legislatively will leave the business community with no option but the initiative process.

Insurers are not the problem. From 1999 to 2001, insurers paid out $1.30 in claims and expenses for every $1 they acquired in premiums. In the last five years, 22 workers’ compensation insurers went insolvent due to this lopsided revenue gap. Other insurers have left the workers’ compensation market, and new companies are hesitant to enter the California market. Simple economics demonstrate that the high-cost factors within the system lie elsewhere.

Generally we agree with the governor’s reform package. Specifically, we stress the need for:
· A predictable, stable workers’ compensation system that will benefit injured workers and reduce the financial burden on employers.
· Establishing uniform disability payments based on objective medical findings, not findings made by attorneys and judges.
· Avoiding any rate control process that will disrupt the operation of an open and competitive marketplace – the best way to assure lower rates for insurance consumers.