Zenith to Lower Workers’ Comp Premiums by 10%
Woodland Hills-based Zenith National Insurance Corp. said Wednesday that it would cut premiums on its workers’ compensation policies by 10% this year, reflecting expected savings from the recent overhaul of the state’s system for treating injured workers.
The rate cuts, just submitted to the state Department of Insurance, are “a measured and gradualistic response” to the overhaul bill signed by Gov. Arnold Schwarzenegger on April 19, Zenith President Stanley Zax said in a statement.
The filing, which applies to rates effective after July 1, was released one day before Insurance Commissioner John Garamendi was expected to release his recommendation to insurance companies for rates on workers’ comp policies starting or renewing during the second half of the year.
Garamendi has indicated that, based on an analysis of the new law’s estimated cost savings, he would recommend a reduction of 18% to 20%. The recommendation, however, is not binding on insurers. Garamendi said the changes made to the workers’ comp system last year and this spring justified bigger cuts than those announced by Zenith, the state’s fifth-largest workers’ comp carrier.
“The question that has to be raised,” Garamendi said, is why insurers “are not passing the savings through.”
Zenith, for now, has opted to go with a conservative rate reduction until more is known about the new law’s effect, Zax said.
“The legislation, which is encouraging and should have a favorable impact on cost trends when fully implemented, should result in additional gradual cost reductions,” he said.
The Zenith filing marks “a step in the right direction,” said Martyn Hopper, California director of the National Federation of Independent Businesses. “Every percentage point the rate’s lowered” is good for business.
