California Insurance Commissioner John Garamendi released the following statement in response to State Compensation Insurance Fund’s recent audit:
“Since taking office in January I have worked to address the growing workers’ compensation system crisis. More compelling evidence of that crisis came today in the form of a PricewaterhouseCoopers audit of the State Compensation Insurance Fund. Auditors found that State Fund’s reserves are inadequate by $1 billion, a number that mirrors my Department’s own findings and reflects a State Fund that is now at mandatory regulatory control level.
State Fund covers roughly 55 percent of all employers within the state. Its financial condition highlights the urgent need for immediate and substantial reform of the entire workers’ compensation system in California. Since 2000, the state has seen 27 workers’ compensation insurers become insolvent, due in large part to soaring medical costs, excessive litigation, administrative inefficiencies and fraud. These forces have driven premiums to record levels and put employers out of business, endangering the benefits that our truly injured workers need and deserve.
I have directed my Department to work cooperatively with State Fund to construct a plan that addresses its immediate problems. I will notify State Fund within seven days of the steps it must take to address its reserve shortfall, and we look forward to a cooperative effort with the Board and management.
But make no mistake – the real solutions to the problems will only come once the entire workers’ compensation system is reformed. Once again I urge our legislators to enact substantial reforms before this $29 billion system collapses”.
Was this article valuable?
Here are more articles you may enjoy.