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Member, Beacon International Group, Ltd.
Employers are praising California Gov. Jerry Brown for prodding lawmakers to send him reform legislation he signed into law yesterday.
It is well-deserved praise. Getting California Democrats, Republicans, employers and labor to agree on a set of deep reforms can't be an easy task and those reforms increase permanent disability benefits for workers while cutting frictional costs for employers.
But a press release from the governor says the legislation “reverses a four-year trend of rate increases.” Judging by all the voices supporting the new law, it seems there is little doubt it will reduce costs.
By I am not so certain that it reverses a trend in rate increases or that it will prevent some substantial rate increases in the near term. I suspect that remains to be seen, especially given that there are still other cost pressures in the system and insurers' combined ratios remain a challenge.
The Sacramento-based Association of California Insurance Companies, meanwhile, warned that “quick and appropriate implementation” of regulations is necessary to realize savings.
The ACIC congratulated the governor and lawmakers, but it said that “with or without reform, costs pressures continue in the system.” It also said that while the important new law should slow cost increases it may not decrease employer costs.
What employers across the country might do about rising workers comp insurance prices and work comp costs in general will be the subject of a free Business Insurance virtual conference to be held on October 25th.
You can get more information about the conference here.