COMMISSIONER SAYS CALIF. WORK COMP RATES ARE GOING DOWN:

California Insurance Commissioner John Garamendi announced that workers’ compensation rate filings illustrate a downward trend, but still fall short of his pure premium rate advisory of minus 20.9 percent issued on May 28, 2004. Incorporating all the filings received by the California Department of Insurance (CDI) as of July 12, 2004, the cumulative, average, premium weighted, overall rate reduction for all companies is minus 10.38 percent since the 2003/2004 reforms. If State Compensation Insurance Fund (SCIF) is excluded from the figures, the rate reduction would have been minus 11.17 percent. The difference of nearly 0.8 percent between the two figures represents approximately $115 million that would have stayed with California businesses. “Workers’ compensation rates are definitely on the down escalator, but the escalator needs to speed up,” Commissioner Garamendi said. “Greater savings are possible, especially from the State Compensation Insurance Fund. Their minus 9.7 percent reduction is far less than the two national companies, Republic Indemnity and Liberty Mutual.” Among the top 10 market share groups, the Republic Indemnity companies filed an average 20.48 percent rate reduction and the Liberty Mutual companies filed an average rate reduction of 17.54 percent. The commissioner noted that SCIF commands 53.03 percent of the workers’ comp marketplace. By comparison, Republic Indemnity and Liberty Mutual companies represent a combined 4.04 percent of the market. In early July, CDI issued a statutorily mandated report, which found that if SCIF were to adopt certain underwriting practices and rating plan recommendations contained in the report, redirected its investment portfolio and reduced maximum commission rates, overall net savings of minus 6.7 percent could be realized. Those savings would be in addition to the 9.7 percent in rate reductions SCIF already filed during 2004.