Calif. Commissioner Adopts 20.9 Percent Decrease in Workers’ Comp Pure Premium Rates

California Insurance Commissioner John Garamendi on Friday announced his decision to lower the advisory pure premium rate for workers’ compensation insurance in California by 20.9%, a clear signal that substantial savings from system reform are reportedly available to provide relief to employers currently paying the highest premiums in the nation.

The recommendation from the Commissioner represents the impact of the estimated $5.5 billion in savings from last year’s reform, AB 227 and SB 228, as well as the impact of this year’s reform, SB 899, estimated to save $2.25 billion. A substantial portion of the SB 899 savings can be attributed to cleanup of AB 227 and SB 228.

Garamendi’s ruling, which insurers are not bound to follow but use as a benchmark, will impact policies issued or renewed on and after July 1, meaning that savings could have a significant impact on employer premiums for many businesses this year.

“The tremendous savings from these reforms will rejuvenate California’s economy by reducing employer premiums, and providing better and more appropriate medical care to our injured workers,” said Garamendi. “But our work is not finished. We must now do everything in our power to ensure that all of the savings go to premium relief for employers, and not to insurers’ bottom lines.”

The Commissioner made the announcement of his pure premium advisory rate at A-1 Door & Business Solutions in Sacramento. Employers such as CEO Jeffery Wilson have reportedly seen their premium rates skyrocket over the past several years primarily due to out of control medical costs and general system dysfunction.

Garamendi made workers’ comp reform his top priority upon taking office in January 2003, immediately focusing attention on the escalating medical costs. Reforms reportedly based largely on his roadmap instituted treatment guidelines and established rules that helped rein in the rising cost.