Calif. Injured Workers’ Advocates Call for Insurers to Trim Rates by 30%, Rate Regulation

Advocates for injured workers in California have called for workers’ compensation insurers to reduce premiums by 30 percent to pass on to employers billions of dollars from two rounds of cuts to injured workers’ medical care and benefits.

Insurance Commissioner John Garamendi last week issued his pure premium advisory rate calling for a reduction of 21 percent. The California Workers’ Compensation Insurance Rating Bureau, has estimated that SB 899 alone cut $3.3 billion from injured workers, and is estimating that the 2004 cuts reduced costs 15 percent.

“Two rounds of cuts to injured workers’ medical and disability benefits have transferred nearly $10 billion dollars from already-strapped injured workers into the bulging pockets of huge insurance companies,” said Art Azevedo, president of the California Applicants’ Attorneys Association (CAAA), whose members represent injured workers. “All across California injured workers are being cut off from medical care and left to live in pain. Yet no rate regulation of any kind has been included in the rounds of cuts, leaving insurers free to add to already-historic profit levels from 2003. It would be a travesty to allow insurers to keep the profits from cutting injured workers’ care. We need a rate rollback, stringent disclosure and prior approval of any rate changes.”

“After injured workers’ benefits were cut by more than $5 billion last year, most insurers did nothing but pocket record profits. The latest round of cuts again reduced benefits to injured workers but allow unlimited profits for insurance companies. Governor Schwarzenegger has stated that the bill cut insurers’ costs by 30%. At least that amount should be passed on to employers. Our experience shows that insurers are cutting injured workers’ benefits by much more than 30%. Those savings must be passed on. Otherwise, insurance companies will simply continue to gouge California employers. The cuts from injured workers are going directly into insurance companies’ bank accounts,” added David Schwartz, president-elect of the California Applicants’ Attorneys Association (CAAA). “You can keep on cutting injured workers’ benefits down to zero, but without regulation insurance companies may not reduce premiums by a single dollar.”