California State Fund Board drops workers’ comp rates

California State Fund Board drops workers’ comp rates

The California State Compensation Insurance Fund board passed a 7 percent decrease in workers’ compensation rates which will take effect on Jan 1. 2013.

The news is a step in the right direction for workers’ comp reform in California, and follows on the heels of Senate Bill 863 which aimed to fix loopholes in our failed workers’ compensation system.

But despite its approval, the first quarter of next year will miss out on the initial rate savings.

“We anticipate they will be effective toward the end of the first quarter in 2013,” said Jennifer Vargen, a spokeswoman for State Fund.

The board voted on the measure after deliberating in a “two-day strategic retreat session in Napa,” the Insurance Journal reports.

Now that California can look forward to lower rates, here’s what we can expect:

-          A $543 million dollar immediate savings for the state of California.

-          Estimated savings of up to $1 billion dollars over several years

-          A 100 million dividend for the 2012 policy year

-          A change in the State Fund broker distribution model which requires representatives to go through one of two wholesalers in order to establish “premium thresholds to qualify for a direct contract.”

We applaud the state of California and its activists for working to reduce workers’ comp rates.

“State Fund has made significant progress in its restructuring plan that is on track to reduce annual expenses by $300 million over a three-year period,” Tom Rowe, State Fund president and CEO, said in a statement. “We’ve made difficult but necessary decisions over the past couple of years and our improved efficiency, disciplined pricing combined with solid investment returns enables us to return money to California employers who are still struggling with a slow economic recovery. State Fund is committed to serving California’s businesses and employees and helping to grow California’s future.”