Workers’ Comp Rates Decrease 10%

California’s workers’ compensation insurance rates have dropped an average of 10% since lawmakers adopted a series of cost-cutting measures, but greater decreases are possible, Insurance Commissioner John Garamendi said Tuesday.

“Workers’ compensation rates are definitely on the down escalator, but the escalator needs to speed up,” Garamendi said. “Greater savings are possible.”

The workers’ comp insurance rates paid by California employers shot up dramatically in recent years, increasing 200% to 300% for some businesses.

Lawmakers responded last fall and this spring with legislation that, among other things, imposed new limits on benefits for injured workers and capped charges by pharmacies, doctors and outpatient clinics in workers’ compensation cases.

In the wake of the changes, Garamendi urged insurers in May to slash rates nearly 21% for policies renewed or purchased after June 30.

He said last week that California’s largest workers’ comp insurer, the nonprofit State Compensation Insurance Fund, could cut its rates an additional 5.9% by changing its underwriting practices, expanding its investments and reducing its commissions. The fund has cut its rates 9.7% since the legislation took effect.

Nicole Mahrt, a spokeswoman for the American Insurance Assn., said insurers were “cutting rates as much as they are able to,” given that not all of the changes in this year’s legislation had taken effect yet.

“I think carriers are reducing rates based on faith,” she said.