23% Increase in Workers’ Comp Rates Requested : Insurance: An industry group tells the state that premiums are inadequate. Employers say rates are already too high.

With California employers already complaining of rising workers’ compensation costs and widespread abuses, an industry association on Monday recommended a whopping 23.1% boost in premium rates.

“Rates are significantly inadequate,” said Robert G. Mike, a spokesman in San Francisco for the Workers’ Compensation Insurance Rating Bureau, an industry association that requested the increase in a filing with the state Department of Insurance.

If the request is approved, insured employers in the state will pay an estimated $2 billion more in premiums than the $8.7 billion paid last year. The rating bureau said the increases were necessary to cover rapidly escalating costs of doctors, hospital stays, vocational rehabilitation and injury claims.

The recommendation was made at a time of intense debate among employers, insurance executives and politicians over how to reform the state’s tangled workers’ comp system. Whereas just about everyone agrees that the system--criticized for its high costs and low benefits--needs fixing, there is widespread disagreement over how to accomplish that.

State Insurance Commissioner John Garamendi said the rating bureau’s recommendation will come in for careful scrutiny at hearings May 13 in San Francisco and May 14 in Los Angeles.

“The proposal . . . is a clear signal that this system is out of control,” Garamendi said. “The cost of this insurance is already strangling thousands of California businesses hit hard by the recession.”

Garamendi reiterated his support for emergency reform legislation sponsored by Assemblyman Burt Margolin (D-Los Angeles) designed to reduce unnecessary insurance company expenses and give Garamendi greater discretion to cut rates.

The California Chamber of Commerce expressed concern about the effect such a large increase would have on businesses. But Allan Varemberg, the chamber’s senior vice president for legislative affairs, said the group recognized that costs were rising. The chamber is backing reform legislation by Assemblyman Jim Brulte (R-San Bernardino).

The rating bureau usually makes rate recommendations once a year. However, at a time when losses are rapidly rising, Mike said, the bureau often seeks interim adjustments such as this one, which would be effective July 1.

Last December, Garamendi granted a rate increase of just 1.2%, a drastic reduction from the 11.9% that the industry had proposed. That rise took effect Jan. 1.

At the time, Garamendi noted that “these are tough times for businesses” and added that an 11.9% rise could be the “straw that breaks many of their backs.” Garamendi has expressed skepticism about the need for rate increases, suggesting that the industry instead should reform itself and crack down on fraud.

The rating bureau said in a statement that it acknowledged that large rate increases are unpopular during tough economic times but added that it would be “irresponsible” not to recommend a rate increase when escalating costs threaten the solvency of the workers’ comp system.