Insurance carriers unsure about workers comp reform in California

Insurance carriers unsure about workers comp reform in California

 

 

A new report at the Insurance Journal says that insurance carriers are uncertain about the future of California’s workers’ comp reform. Since the new law is slated to take effect at the start of the new year, carriers are unsure whether the new law will save state spending, containing the unruly workers’ comp system that has historically burdened the state.

“I am cautiously optimistic that it’s a step in the right direction, but it’s the unknowns that concern everybody,” Christopher Flatt,  New York-based Marsh USA Inc.’s workers’ compensation center of excellence leader. He is among many carriers who have left the state due to the expense involved in insuring companies in the state of California.

Insurers’ are hoping for a “best case scenario” as Insurance Journal points out: “Costs are contained, permanently disabled workers get more benefits and California’s workers’ comp market remains somewhat viable for insurers.”

On the other hand, there’s a worst case scenario that is also plausible: California could return to the workers’ comp system of the 90s and early 2000s – a time where many carriers stopped writing policies in California.

The new law will take effect January 1. Senate Bill 863 was passed earlier this year with a promise to “stop the bleeding” of workers’ comp abuse in California. The pending legislation aims to save the state $1 billion dollars annually all while increasing benefits for disabled workers.