Sacramento, CA – Recently the California Senate Industrial Relations Committee held a joint hearing with the Assembly Insurance Committee to examine California’s permanent disability ratings process and consider potential changes. As costs continue to rise in the system, the Association of California Insurance Companies (ACIC) urges policymakers to support the Brown Administration and legislators’ calls to balance proposed increased benefits with reforms that will control costs and maintain predictability.
“In 2012, legislators may consider a comprehensive measure that will provide increases to the permanent disability ratings,” said Mark Sektnan, ACIC president. “It is vital that increases in permanent disability ratings are offset by cost saving reforms in the system. Changes under consideration to the permanent disability rating system must deliver additional benefits to the injured workers with the most severe injuries. Reducing costs in the system is important to both insurers and self-insured employers like local governments and school districts.”
“The historic reforms enacted in 2003 and 2004 saved California’s workers compensation system from a crisis. Employers were paying over $6.29 per $100 of payroll and California’s system was known as the most complicated, expensive and litigious in the country,” said Mark Sektnan, ACIC president. “Today, employers on average are paying $2.37 per $100 of payroll and the system is based on objective peer-reviewed evidence-based guidelines. Written premium for the private insurance marketplace has shrunk from $23.5 billion in 2004 to $8.3 billion in 2011. The reforms were successful in making an out of control system into a predictable and stable system where both privately insured and self insured entities can accurately predict workers’ compensation costs. But with any reform effort, there are always unexpected consequences. Medical costs specifically are on the rise and insurers are now facing a combined ratio of $1.30. This year there is an opportunity to have a productive discussion about how to increase permanent disability ratings where appropriate, while reducing cost drivers that continue to threaten California’s system.”