Advocates for California injured workers have called for workers’ compensation insurers to reduce premiums by 25 percent and pass on to employers billions of dollars from two rounds of cuts to injured workers’ medical care and benefits.
The California Workers’ Compensation Insurance Rating Bureau, has estimated that SB 899 cut $3.3 billion from injured workers, and is recommending a pure premium rate reduction of up to 15 percent. Several billion additional dollars will be taken from injured workers in 2005 when permanent disability benefits are reduced.
“Two rounds of cuts to injured workers’ medical and disability benefits have transferred billions of dollars from already-strapped injured workers into the bulging pockets of huge insurance companies,” said Art Azevedo, president of the California Applicants’ Attorneys Association (CAAA), whose members represent injured workers. “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. The cuts are a windfall to unregulated insurers. For insurers to pocket these billions adds further insult to injured workers and continues to squeeze employers.”
According to the CAAA, recent earnings reports from insurers have recorded high profit levels. For example, Zenith National Insurance Company, one that is almost exclusively devoted to workers’ compensation in California and Arizona 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 allow 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,” added David Schwartz, president-elect of the CAAA. “You can keep on cutting injured workers’ benefits down to zero, but without regulation insurance companies may not reduce premiums by a single dollar.”
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