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Employers will
benefit from a projected savings in claims
costs of $15.0 billion for policies incepting
in 2006. This is in comparison to what costs
might have been absent the California workers'
comp reforms. This is according to the study
done by Bickmore Risk Services and just
released by the Division of Workers'
Compensation. (A PDF copy of the study
can be found at Alandale's website here.)
In its
executive summary alone, the study proves what
the industry and employers have said since the
beginning of 2004. The reforms are fixing the
market. If not for the reforms, rates would be
substantially higher for employers. It also
demonstrates that rate regulation championed
by many Democrat legislators is unnecessary
and counterproductive.
According to
the study, it's projected that the approved
insurance rates have decreased by 46 percent.
Starting in 2003, average rates of $4.81 per
hundred dollars of payroll have decreased to
$2.59 per $100/payroll during a three year
span. Rates are now lower than they were in
1996.
Of the
reforms, the new Permanent Disability Rating
Schedule yielded the most cost savings with 40
percent. The study also backed up what
producers have been saying: private insurance
companies are returning to California, and
more employers are able to get multiple bids
on insurance policies.
Bickmore was
tasked to do this study last year per a
mandate in SB 899. The study was required to
determine if rates were dropping sufficiently
because of the reforms, or if rate regulation
was needed. Despite the good news, Bickmore
sounds a note of caution about the uncertainty
regarding the ultimate cost of claims under
the reforms.
Armies of
applicants' attorneys are assaulting the
reforms in the courts, and at this moment, the
PDRS is being targeted for a revision.
Workers' comp initiatives designed to roll
back the reforms may make the November ballot,
and regardless of the study, proponents of
rate regulation may well revisit the issue
through either legislation or initiative. This
is by no means the last word.
(Article
Taken from WC Exec)
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