Zenith National Insurance Corp. reported that its wholly owned subsidiary, Zenith Insurance Company, has filed with the California Department of Insurance its workers’ compensation rates for use on or after July 1, 2004. The filing reflects, among other factors, its current estimate of the savings associated with the California workers’ comp reform legislation of 2003 and 2004.
Commenting on the filing, Stanley Zax, chairman and president, said, “We believe a measured and gradualistic response is appropriate to estimating the future financial impact of the workers’ compensation reform legislation. This is due to many factors, among which are the role of government in operating the system and its efforts to fight fraud, the relative insensitivity of the California system to cost reductions, the experimental nature of many of the reforms, the fact that some of the reforms may increase operating costs or loss costs, the fact that several key reforms will not become effective until January 1, 2005, the long learning curve which will be necessary by all participants to implement the changes, and the risk and cost of litigation. As a result, we have filed to reduce our rates by ten percentage points effective July 1, 2004, on new and renewal policies.”
In summary, Zax added, “The legislation, which is encouraging and should have a favorable impact on cost trends when fully implemented, should result in additional gradual cost reductions, the amount and timing of which are not quantifiable or cannot be prudently estimated at this time. As we witness the additional impacts of the legislation, we will make additional appropriate rate adjustments.”
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