Calif. State Senator Amends Rate Regulation Plan

California State Senator Richard Alarcón, ( D- Van Nuys) chairman of the Senate Labor and Industrial Relations Committee, has set a committee hearing in anticipation of a comprehensive workers’ compensation reform package. The bill review hearing is set upon adjournment of session (approx. 11:30 a.m.) on Monday, April 12, in Rm. 4203 of the State Capitol in Sacramento.

Alarcón is also releasing details of an amended version of the workers’ comp insurance rate regulation bill that he first submitted last year.

The Senator is proposing this newly amended version, SB16xxxx be part of the comprehensive reform package. Alarcón is the author of last years’ reforms that reportedly saved an estimated $5-$6 billion dollars in the workers’ comp system. The Senator however, believes those savings were not passed along to employers in the form of lower rates. “I remain solid in my conviction that in order to insure that the savings of further reforms are passed on to employers, we must have a fair and transparent process for setting workers’ compensation insurance rates. “

The amended plan calls for the creation of a “Commission on Workers’ Compensation Rate Regulation,” which would be composed of one representative each from the Insurance Commissioner, the Division of Workers’ Compensation
and the Attorney General.

The Commission would have the authority to set an industry-wide maximum and a minimum pure premium rate and would also set maximum and minimum bounds for the additional amount allowed for administrative costs and profits.

Under the Alarcón plan, insurance carriers would be allowed to appeal to the Commission and (in a public forum) argue for exemptions. Agencies and interested parties such as the Workers’ Compensation Insurance Ratings Bureau, the Chambers of Commerce, the Commission on Health Safety and Worker’s Compensation, labor representatives, consumer advocates and others – would be allowed to act as “intervenors.”

The intervenors would be allowed to present public testimony either in support or opposition of proposed rates or exemptions at every phase of the process.