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Workers’ comp premiums may rise

April 13, 2012

A proposal Thursday by a state insurance rating agency may cost employers more for their employees’ work-related injury and illness premiums. The planned rate of increase, 4.1 percent, is smaller than in previous years but is expected to ignite yet another political fight around the program. [Sacramento Bee]

The so-called “pure premium rate” would be hiked 4.1 percent, raising costs to employers from $2.41 to $2.51 per $100 of payroll.

Premiums dropped following legislative reforms in 2004, but insurers have not been happy about what they describe as rising costs. Those reforms, according to labor unions and some attorneys representing injured workers, too often deny legitimate compensation for disabled workers.

Insurance Commissioner Dave Jones will conduct hearings on the issue, then make his own recommendation. Insurers then set their own rates.


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Wow!


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I went through the Worker’s Comp program in 2003-2004; the so-called “reform” put in place in 2004 was retroactive to all cases that were not finalized prior to the legislation being put into place. I learned that prior to the new laws, 75% of WC cases were approved with little or no challenge to the true validity of the claims, so yes, there was rampant fraud, back then. The most disturbing “fact” was that apparently most of the fraud being uncovered was being committed by state employees, Highway Patrol officers, Cal Trans workers, correctional officers and the like; really made me sad since I usually think of most of those employees as hard working and above board. After the new law was passed, upwards of 75% of claims are rejected outright. In my case, I had six doctors submit reports concerning my condition; five of them supported my claim, the one doctor hired by the insurance company did not support my claim, and his report was the basis for the WC judge to reject my claim. If I sound bitter it is because I am. A lot of fraud has been eliminated, but that could have been accomplished with better follow through and oversight by auditors, but that would mean more government “workers”; instead we have far too many cases being decided by a judge who seems to take some glee in causing a lot of misery for injured workers to have to find some way to support themselves in a much reduced manner then they were used to, and still the insurance companies are making record profits.


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I closed down a business with 9-10 employees almost 10 years ago. There were several reasons but the biggest was Workman’s Comp rates. My business was by nature physically challenging and the base rates set by the state were high because of that. What really killed me though was that they basically didn’t want to fight 2 claims for injuries that occurred off the job “because the plaintiffs lawyers can make a case that if the job wasn’t so physically strenuous, these injuries might not have occurred.” I could see their reasoning but I didn’t agree that was necessarily the case and I didn’t like it.


So instead of risking an expensive defeat, they caved in and pushed the costs of treatment and re-training off to increased rates for me — adding about $11 per hundred dollars in payroll to already high rates. I had to then jack up my rates to my clients to cover those increases and they started looking elsewhere for services (& I don’t blame them a bit.) A similar thing happens with many other forms of insurance too — except that sometimes you just can’t get insurance if you have too many claims even if they are not your fault.


This is about the time Arnold S. was running to replace Grey Davis and Work Comp reform was the biggest reason I voted for him. Unfortunately, the changes he made were too late to help me (and probably too little as well).


There is a systemic problem in the justice system where the cost of handling legal actions gets people to abandon just causes due to time and expenses. I don’t know the cure, but I do know that Insurance rates are not the only thing that is adversely affected by it.


Oh, and on the same subject, injuries which render employees permanently unfit to continue in their old job require that workman’s comp insurance be used to retrain the employee in another field they can handle. I had three such employees over 15+ years. Two of them got this overpriced retraining and were unable to use it. One tried and failed. The other I don’t know about other than he didn’t do anything with his training. That little scam needs to be re-examined too.


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Workman’s Comp need reform, no doubt about it. The problems are systemic and include not only abuse of the system by slackers and malcontents but also manipulation from the insurance commissioner’s office.

Of a far greater significance to California’s woes however are the Prevailing Wage laws for work funded by any federal or state money. Off topic here but maybe it will surface on CCN at some point.


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Eliminate the fraud in the system! That would cut the cost in half! The people that abuse it should be

prosecuted!


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Reminds me of the “broken windows fallacy,” first described by Frederic Bastiat. A hoodlum (AKA, bureaucrat?) heaves a stone (higher rates?) at a window (employers) and breaks it (them). Replacement glass costs $100.


Shortsighted people will rest assured that this act will at least provide income for the window merchant. After all, if windows were never broken, what would happen to the glass merchants? The money he will get from the unfortunate businessman with the broken window will then “circulate” throught the economy and yield endless “benefits,” i.e., money and employment in ever wider circles in the local economy. The “logical” conclusion is that the hoodlum is a public “benefactor.”


But is this really true? It certainly is for the glass merchant. But the merchant will be out the $100 for that new suit he was saving for. Now he will not buy that suit. Instead of having a window and $100, he only has a window. That suit which would have beens sold, isn’t, and the town is that much poorer for it. No new “employment” has been added. Observers were thinking of only two parties in the transaction. They forgot the third party in the transaction, the tailor, the latter not putting in an appearance. They have seen the broken window, but they have not seen the unsold suit, because it will never be made. They only see what is in front of their eyes.


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Again in our office yesterday we were discussing moving the business to Utah from Cali as we continue to incur increases year after year here. Last Year I contacted the Utah state rep on relocation incentive’s and it looks better all the time . All of our fellow employees will be able to afford a nice home that won’t cost 60% of our income. As a tech business we can operate from anywhere in the country.

Keep it up California politicians.


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Robert don’t confuse the people who say that business isn’t paying their share. It hurts their minds.


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Robert1….you do realize that you’d be waking up each day in Utah, right? You don’t say you care about people then move them to Utah! :) Adios.


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Right, because Utah’s costs don’t rise correct?


Study Finds California Offers Unexpectedly Business-Friendly Environment


California is blessed with natural advantages that may outweigh tax burdens and other overhead costs

http://sanfrancisco.cbslocal.com/2011/04/14/study-finds-california-offers-unexpectedly-business-friendly-environment/


California’s Business Climate — Myths & Facts


MYTH: California’s high-taxes and cost of doing business is driving businesses and jobs to states with fewer regulations


FACT: California loses very few jobs from businesses leaving the state. In fact, only 11,000 jobs leave the state annually out of a total of 18 million jobs. That’s only 0.06% of California’s total jobs that are lost by businesses moving out of state.


The biggest job creation and loss engine are businesses opening, expanding, shrinking and closing within the state due to normal business cycles-very few businesses leave the state to our neighbors.

http://www.calitics.com/diary/10142/californias-business-climate-myths-facts


California’s business tax burden no heavier than average

http://articles.latimes.com/2010/oct/24/business/la-fi-adv-biz-taxes-20101024


Business Climate Rankings and the California Economy

http://www.ppic.org/content/pubs/report/R_411JKR.pdf


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Nicely worded…. “California loses very few jobs from businesses leaving the state.” – I wonder how many are lost because businesses stayed? Most people I know who left had already lost their job here, so I take those stats with a grain of salt.


The more accurate figure, to establish or debunk business-friendly environments, would be overall job loss/gain.


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11,000 jobs leave the state annually out of a total of 18 million jobs.


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Keep telling yourself that and over and over and over and over again, and soon you will believe it.

Because its BS, fact, Cali is one of the most expensive states to live in and do business in period,

http://www.foxbusiness.com/on-air/varney-co/transcript/companies-bid-farewell-california

8 out of 10 jobs in our office are head of household jobs, 6 are $100k plus a year. If you make $100k a year in most other states you can live very very well but not here on the central coast.


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Got it, Biz groups and race to the bottom groups say Cali isn’t moving fast enough to the bottom like Texas right? After all Texas is growing? And among the leaders in min wage jobs (1st place- 10% of jobs), uninsured, kids uninsured, teen preg, high school dropouts, domestic violence. AND if you make $50,000 a year you pay a whopping approx $1,000 a year more to live in Cali versus Texas!


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Sounds like you need to replace the word “Texas” with Cali because that’s sounds just like California.


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That story is from 2010 and from fox.


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Exactly Robert. My friend in Santa Barbara is making bank assisting businesses in moves to business friendly states. Hey I’ve an idea, they can invent a you used to be in California tax. Think of it as an aura tax, or an abandonment assessment fee.


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Wait long enough a democrat will propose it.


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Pure premium rate is NOT the final rate employers will be charged. I received new briefs yesterday indicating a likely overall increase will be somewhere around 9.1%. “Insurers then set their own rates” And they do indeed. Keep in mind, Wcomp is rated by classification, or what kind of work your employees are doing. The $2.41 rate quoted above is for example only. It is NOT the starting pure premium rate for all classifications.


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