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State Compensation Insurance Fund at the end of 2005 had a roughly 36 percent share of the market for workers' comp, according to a recent study by Bickmore Risk Services, a risk management consultant.

With 240,000 policy holders, State Fund remains the dominant workers' comp carrier in California, spokesman Jim Zelinski said Tuesday. But the latest figures are far below its peak market share of 58 percent that it reached in the final six months of 2003.

State Fund's market share is deemed by reformers to be a crucial barometer of the health of the workers' comp industry. Soaring medical costs had chased away a number of private insurance carriers who shunned California and its once-broken system to pay and treat injured workers.

Now that reforms have helped to control medical expenses, more insurers have ventured into the California workers' comp arena. That, in turn, has helped State Fund's insurance rivals undercut the giant carrier's fees and reduce the costs that businesses have to pay for premiums to compensate people who are hurt on the job.

"It was difficult for private insurers to compete against State Fund and its market share increased exponentially," said Susan Gard, a spokeswoman for the state's Division of Workers' Compensation, which commissioned the Bickmore study.

"Workers' comp is becoming a more profitable endeavor," Gard said. "More companies are entering California, and they can charge lower rates than State Fund."

California chartered State Fund to ensure that any business could obtain workers' comp coverage, which is mandatory in the Golden State.

Still, some observers say the encouraging trends that point to more competition should not obscure significant problems with the most recent workers' comp reforms, which were engineered in 2004 by Gov. Arnold Schwarzenegger.

"There is no question the reforms have cut costs, but that has happened by severely harming the people the system is supposed to help, the injured workers," said Mark Gearhart, a partner with Pleasant Hill-based law firm Gearhart & Otis, which specializes in representing employees who are hurt while working. "The safety net for workers has become a thread."

Some critics of how the reforms have evolved say the application of the laws backed by Schwarzenegger and his predecessor, Gov. Gray Davis, have unfairly reduced benefits and medical treatment for too many injured workers. The primary winners have been businesses and workers' comp carriers, they say

Californians Injured at Work Director Sam Gold said his organization wants to put a workers' bill of rights measure on the California ballot in response to what he sees as the system's new inequities.

"This is not a done deal," Gold said. "The battle will come back into the forefront. There is nowhere for injured workers to go."

Still, the overall trends show progress in the wake of the reforms, insisted Sen. Charles Poochigian, R-Fresno, the principal author of the 2004 revamp.

"When the market was healthy, State Fund had a market share of about 20 percent," Poochigian said. "The latest results validate what we reformers believed would be the outcome of the measures to fix the broken system."

The fast-rising premiums for workers' comp were often cited as an ingredient that helped to sour California's business climate because the insurance made it expensive to operate in the state.

"I hear regularly from any number of small-, medium- and large-business owners who praise the reforms and say they have been saving money," Poochigian said.

Even State Fund, the big carrier that is losing market share, is pleased with the direction of the market.

"We view this as a positive outcome," State Fund's Zelinski said. "We have said for years that we welcome increased competition."

(Article taken from Contra Costa Times)