Sacramento, CA – Marjorie Berte, Western Region vice president for the American Insurance Association (AIA), made the following statement in response to passage of workers’ compensation reform legislation by the California State Legislature. The bill, SB 863, aims to reduce costs within California’s workers’ compensation system by attacking cost-drivers. The Workers’ Compensation Inspection & Rating Bureau (WCIRB) has projected that SB 863 will provide $880 million in savings but will add $610 million in 2014 benefit increases. The estimated savings of $270 million on 2014 injuries represents a decrease of just 1.4 percent in total system costs. The Assembly passed SB 863 by a vote of 66 to 4 and the Senate followed by a vote of 34 to 4 on the final day of the Legislature’s two-year session which concluded yesterday.
Ms. Berte’s statement follows:
“AIA supports efforts to improve the California workers’ compensation system. While SB 863 contains many beneficial reform components that address many well-documented cost-drivers, its projected savings are minimal. AIA would have preferred the adoption of legislation that contained additional cost-cutting measures that would result in greater savings.
“While much work went into the bill, much work remains to be done. Reduction of system costs by 1.4 percent can be seen as a good start, further savings must be found. Meaningful reforms that will lead to meaningful reductions in system costs are required. AIA will continue working with our partners in the business community toward achieving a result that will be positive for all California’s employers.”
“It will take the full implementation of SB 863 in 2014 before we can determine whether or not any cost savings are actually realized and how those savings will impact the marketplace. AIA will work with the Brown administration and the employer community to ensure speedy and effective implementation of the many provisions of the legislation that require regulatory action.”