The state and just about every Californian are clear winners in the effort to reform workers’ compensation.
State benefits from reform of workers’ comp
Monday, August 15, 2005 - The state and just about every Californian are clear winners in the effort to reform workers’ compensation.
Just two years ago, workers’ comp insurance was a job-killing, economy-crippling menace. Insurance rates had spiked so much in such a short time, by as much as 200 percent to 300 percent, that businesses of all sizes were forced to pull back, cutting jobs, freezing hiring, and in some cases moving to a more business-friendly state.
It’s impossible to estimate the full impact rising workers’ comp premiums had on the state economy, as it cost countless jobs and contributed to a slow economic recovery after the 2001 downturn.
Finally, workers’ comp rates are moving in the right direction. Insurance Commissioner John Garamendi announced last week that premiums are down by an average of 15 percent statewide for recently renewed policies. A leading business association says premiums have dropped by 15 percent to 20 percent for its members, and is expecting another 10 percent to
15 percent reduction in the next six months.
And what do business owners do when they feel good about the prospects of doing business in California? They retain employees. They expand and hire. And, importantly, they stay put.
Though unions and workers’ comp attorneys are protesting the changes, how could any reasonable Californian want to return to the old system? It was costing business owners far more than their counterparts in any other state, yet was treating injured workers worse than in any other state. So many insurance companies went bankrupt or stopped doing business in the state that the publicly owned State Compensation Insurance Fund was left as California’s primary provider.
The near monopoly didn’t serve anyone. The state now has about 15 companies underwriting policies, and the competition is helping bring down prices.
Since July 2003, rates have dropped by an average of more than 25 percent. That’s still not enough, when the rates for many businesses doubled and tripled during the bad years.
It’s an encouraging sign, though, and one that bodes well for California’s job market and business climate.
Monday, August 15, 2005 - The state and just about every Californian are clear winners in the effort to reform workers’ compensation.
Just two years ago, workers’ comp insurance was a job-killing, economy-crippling menace. Insurance rates had spiked so much in such a short time, by as much as 200 percent to 300 percent, that businesses of all sizes were forced to pull back, cutting jobs, freezing hiring, and in some cases moving to a more business-friendly state.
It’s impossible to estimate the full impact rising workers’ comp premiums had on the state economy, as it cost countless jobs and contributed to a slow economic recovery after the 2001 downturn.
Finally, workers’ comp rates are moving in the right direction. Insurance Commissioner John Garamendi announced last week that premiums are down by an average of 15 percent statewide for recently renewed policies. A leading business association says premiums have dropped by 15 percent to 20 percent for its members, and is expecting another 10 percent to
15 percent reduction in the next six months.
And what do business owners do when they feel good about the prospects of doing business in California? They retain employees. They expand and hire. And, importantly, they stay put.
Though unions and workers’ comp attorneys are protesting the changes, how could any reasonable Californian want to return to the old system? It was costing business owners far more than their counterparts in any other state, yet was treating injured workers worse than in any other state. So many insurance companies went bankrupt or stopped doing business in the state that the publicly owned State Compensation Insurance Fund was left as California’s primary provider.
The near monopoly didn’t serve anyone. The state now has about 15 companies underwriting policies, and the competition is helping bring down prices.
Since July 2003, rates have dropped by an average of more than 25 percent. That’s still not enough, when the rates for many businesses doubled and tripled during the bad years.
It’s an encouraging sign, though, and one that bodes well for California’s job market and business climate.
posted by Solano EDC at 10:30 AM
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