Alliance Urges Caution on Calif. Workers’ Comp Rate Rollbacks

The Alliance of American Insurers (AAI) on Tuesday stressed the need for a cautious approach to any rate rollbacks in workers’ compensation insurance in California.

“We’re already seeing a wide variation in the estimates of savings that may be generated based on the recent legislative changes made to the workers’ compensation system,” said Peter Gorman, vice president and Western Region manager for the Alliance.

“Promising savings is one thing. Delivering on that promise is much more difficult,” continued Gorman. “The Alliance is not convinced that the changes made to the system will generate savings anywhere close to the numbers that have been extolled by lawmakers and regulators. There are also many new costs to insurers in the legislation that have not been calculated in these savings estimates. We think a 4 percent rate decrease, as suggested by Commissioner Garamendi, is unjustified at this time and such a decrease could do more harm than good in the long run.”