Warning about potential insolvency among workers' compensation insurers, state Insurance Commissioner Dave Jones is supporting an increase in employer-paid premiums even though an overhaul of the compensation system for injured and ill workers, passed by the California Legislature this year, promised savings to employers.
Jones' "recommendation" is not binding on insurers, who are free to set their own premiums, but the industry generally follows the insurance commissioner's positions. He is, in effect, responding to insurers' complaints in recent years that their costs of providing cash benefits, medical care and rehabilitation to disabled workers have outstripped their revenues.
Jones described his "pure premium" recommendation of $2.56 per $100 of payroll as "a modest 2.8 percent increase" over the current "filed rate" of $2.49.
With workers' compensation insurance premiums running about $12 billion a year, Jones' recommendation could cost employers more than $300 million a year if it is adopted by insurers.
Jones' recommendation disregards a position by the independent Workers' Compensation Insurance Rating Bureau that any change in pure premiums await the Brown administration's implementing regulations and further analysis of the overhaul's effects.