Garamendi OKs Workers’ Comp Rate Hike of 6.7% : Insurance: He also renews his call for reform of the system. The boost falls far short of the 23.1% requested by an advisory agency.

Insurance Commissioner John Garamendi on Thursday approved a 6.7% hike in workers’ compensation rates--far less than the industry sought--while renewing his call for comprehensive reform of the system that provides benefits for workers who are injured on the job.

“There are simply too many pigs feeding at the trough,” Garamendi said. “We must stop the special interests from unjustly profiting from an increasingly costly workers’ compensation system.”

The rate hike, which goes into effect immediately, fell far short of the 23.1% increase hike that had been requested by the Workers Compensation Insurance Rating Bureau, a San Francisco advisory agency.

Nonetheless, employers were distressed by the increase, noting that high workers’ compensation rates were driving industry out of the state.

“Garamendi just lost some good business people,” said Elizabeth Hill, human resources director for Tri-Plas in Ontario. “They are going to move to Arizona and Nevada and everywhere else.”

Tuesday’s increase is likely to boost the workers’ compensation rates for the company, which has 225 employees, by about $20,000, Hill added. The plastics manufacturing company now pays annual premiums of $300,000 to cover 130 California workers. Tri-Plas’ remaining 95 employees work in North and South Carolina and Pennsylvania. Workers’ compensation premiums paid for the out-of-state workers amount to one-quarter of the California costs, she added.

Meanwhile, a spokesman for the Workers Compensation Insurance Rating Bureau in San Francisco said the smaller-than-requested rate hike will make it difficult for insurers to earn a reasonable profit in the state. And in the long run, that could cause insurers to abandon California.

“I don’t think the system is going to collapse in the next year or two, but over the long term, inadequate rates can lead to serious availability problems,” said spokesman Robert G. Mike.

The rating bureau, which has been charged with suggesting appropriate workers’ compensation rates since 1915, said the full 23.1% was needed to cover rapidly escalating costs of doctors, hospital stays, vocational rehabilitation, stress and injury claims.

However, insurance regulators disagreed with the way the rating bureau calculated projected losses for 1992. Public testimony and independent consultants believed that the evidence presented by the Workers Compensation Insurance Rating Bureau did not justify such a large increase, Garamendi said.

Recession-ravaged California companies cannot afford big rate hikes, Garamendi added. Furthermore, the state’s system has “run amok,” producing some of the highest workers’ compensation premiums in the nation, while providing some of the lowest benefits to workers.

Garamendi said he will continue to support workers’ compensation reform--a hot issue in Sacramento, where Gov. Pete Wilson and several state legislators have proposed dueling plans to cut back on both fraud and expenses.

Garamendi also plans to request more money to bolster the state’s workers’ compensation fraud investigation unit, which is charged with ferreting out dishonest doctors, lawyers and individuals who trump up workers’ compensation claims. Garamendi estimates that between 10% and 20% of every premium dollar is spent on fraudulent claims.