The California Applicants’ Attorneys Association (CAAA) on Thursday said two rounds of cuts to injured workers’ medical and disability benefits have transferred billions of dollars from already-strapped injured workers into the fattening pockets of huge insurance companies.
According to the CAAA, no rate regulation of any kind has been included in the rounds of cuts, leaving insurers free to add to already-historic profit levels from 2003. While insurance industry research bureaus put out phone figures from before the massive cuts were made to workers’ benefits, current profit statements reportedly show the truth: the cuts are a windfall to unregulated insurers. The CAAA continued, “Surely the chief executives of insurance companies and their investors don’t need to get even richer at the expense of some of the poorest Californians. But that’s what the governor and the legislature had done.”
Zenith National Insurance Company, one that is almost exclusively devoted to workers’ compensation in California and Arizona, has again reported historic profits in the wake of the insurance industry’s successful repeat attack on injured workers’ benefits. Zenith has reported more than doubling its first quarter net income over its already-very profitable 2003 results.
“After injured workers’ benefits were cut by more than $5 billion last year, most insurers did nothing but pocket record profits. The latest round of cuts again reduced benefits to injured workers but allowed unlimited profits for insurance companies. Insurance companies are continuing to gouge California employers. The cuts from injured workers are going directly into insurance companies’ bank accounts,” said David Schwartz, president-elect of the CAAA.
“The governor and the legislature have taken away benefits from injured workers, benefits that are already too low. You can keep on cutting injured workers’ benefits down to zero, and without regulation insurance companies may not reduce premiums by a single dollar,” added Schwartz.
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