ACSA has been closely following an issue involving a possible increase in workers’ compensation rates, since the California Department of Insurance notified the public it was considering such an action. The Workers’ Compensation Insurance Rating Bureau had notified State Insurance Commissioner Steve Poizner that a rate increase would be needed to cover the increases in medical treatment and claims adjustment costs.
The WCIRB had recommended a 16 percent increase to workers’ compensation costs beginning Jan. 1, 2009. On Oct. 24, Poizner rejected the 16 percent increase and instead recommended a 5 percent increase in the average premium charged for workers’ compensation insurance beginning Jan. 1. Poizner recognized that an increase was due in order to cover rising costs for medical treatment.
What does this recommendation mean to school districts? First of all, it does not apply to school districts that are self-insured. For those districts that are not self-insured, this recommendation is only a guideline for insurers writing workers’ compensation policies in California. The Department of Insurance does not have the authority to set workers’ compensation rates, but Poizner did advise insurers “to be cautious if they seek to adjust rates.”
Each insurer sets its own rates based on a set of factors. The premiums paid by individual employers in California starting in January will depend on a variety of factors and may be more or less than the commissioner recommended. According to the Workers’ Compensation Action Network, in October, insurers filed for average rate increases ranging between 3.3 percent and 7.6 percent.
In addition to the rate increase, the Department of Insurance also renamed the Pure Premium Advisory Rate to the Workers’ Compensation Claims Cost Benchmark. This was done to more accurately define the estimated change in claim costs that develop in the workers’ compensation pricing system.
Even with this new adjustment, the Workers’ Compensation Claims Cost Benchmark has fallen more than 63 percent since 2003.
In another set of issues regarding workers’ compensation, the California Division of Workers’ Compensation has delayed putting into place a new permanent disability rating schedule until July 2009. This division is in charge of overseeing benefits for workers injured on the job. Officials had thought new permanent disability regulations would take place in April 2008, then January 2009 with July 2009 the next anticipated release date. The division is updating benefit rules for permanently disabled workers because of the workers’ compensation reforms in 2004.
It is thought those reforms cut into injured workers’ benefits too much, by as much as 50-70 percent. These cuts did save employers statewide billions of dollars in insurance premiums and boosted return-to-work rates. The reforms were also intended to make the system more objective in deciding how much to pay an injured worker.
The Division of Workers’ Compensation is on record wanting to make two changes to the rules adopted in 2005 to reflect legislative reforms. Officials want to make changes to the areas related to age and to future earnings capacity. They are waiting for additional data to better understand workers’ wage losses following an injury. The division calculates the percentage of someone’s disability, but the amount of money a worker gets for a disability is set legislatively.