Workers' compensation insurance savings haven't started coming for
local employers despite state legislative changes more than four
months ago that were touted as rate reducers.
California's workers' compensation insurance rates are among the
highest in the nation, and were a target of reforms that Gov. Arnold
Schwarzenegger vowed would make the state more business-friendly.
Local business operators said they haven't seen any significant
savings yet, and they're skeptical about what's to come.
"They keep touting that businesses out there are realizing real
improvements," Costa Mesa Chamber of Commerce President Ed Fawcett
said. "When I got my next bill, it was every bit as much as the
There's a sense of frustration among business owners who have seen
only minor decreases, if any, in their rates. Most said they saw no
reduction, a few had heard from business owners whose rates had
decreased less than 10%, while others said they're paying more than
the last time they renewed their policies.
"I have seen nothing," said Louise Robinson, office manager at
Glenn's Alignment in Costa Mesa. "In fact, our rates went up, and we
did not have as much payroll as we did the year before."
In the eyes of business owners, the workers' compensation industry
still has problems with fraud and greedy attorneys. But one of its
biggest problems is that the state Workers' Compensation Insurance
Fund controls 60% of the market, 70th District Assemblyman John
Campbell said. Another 20% of companies can afford to self-insure, so
only about 20% of the insurance is provided by third-party insurance
companies in a competitive market. That has to change to bring rates
down, but it won't happen immediately, he said.
"We expect to see more reductions after Jan. 1, and I think
depending on how the elections go in November, you may see some more
reform proposals next year to try to drive down rates," he said.
But a recent analysis by Standard & Poor's insurance ratings
division predicts disaster for the state workers' compensation system
if rates are forced down too far, too fast. A state fund that backs
insolvent insurers has had to borrow heavily in recent years, and the
state-controlled portion of the insurance market is still unstable,
the report said.
A few businesspeople, like Newport Beach Chamber of Commerce
President Richard Luehrs, are optimistic rate reductions are coming
"I'm not sure there's been enough time to let all of this shake
out," he said. "I think [people are] expecting a reduction in their
But most said they have little faith in the promises of
politicians supposedly fixing the system.
"I don't know what to expect," said Randy Garell of Costa Mesa
sport and outdoor store the Grant Boys. "I'd like to say I think
there's going to be a change, and we're going to see a little relief.
But until I see a change, I'm not actually going to believe it."
The continued pressure from workers' compensation, plus the threat
of an increased minimum wage and other expenses, is making it hard
for small businesses to survive, said Dan Marcheano, owner of the
Arches restaurant in Newport Beach for 23 years. If minimum wage and
social-security deductions go up, he might have to shut down his
lunch operations, he said.
The state Senate on Thursday voted to boost minimum wage to $7.75
over the next two years, but Schwarzenegger is expected to veto the
It might take more businesses leaving the state to spur
legislators to make effective reforms, Fawcett said.
"I'm a native Californian," he said. "This is the first time I'm
thinking of leaving the state and retiring elsewhere."
* ALICIA ROBINSON covers business, politics and the environment.
She may be reached at (949) 764-4330 or by e-mail at