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DANA POINT, Calif. — A panel of insurers and workers compensation claims handlers said Wednesday that they don't expect California's recent workers comp reforms to reduce system costs for payers in the state.
S.B. 863's expected impact was discussed during an “open mic” panel at the California Workers' Compensation & Risk Conference in Dana Point, Calif. The panel was moderated by Pamela Ferrandino, New York-based casualty practice leader for Willis North America Inc.
The reform bill was signed into law Tuesday by California Gov. Edmund G. Brown Jr. It aims to reduce comp costs for employers and insurers while boosting permanent disability benefits for injured workers by 30% during the next two years.
Mark Wilhelm, CEO of St. Louis-based Safety National Casualty Corp., told conference attendees that the insurer expects S.B. 863's impact to be “cost neutral at best” for workers comp payers.
He noted that increased benefit costs can be quantified by workers comp insurers and claims handlers. However, Mr. Wilhelm said savings from reforms, such as an independent medical review process and fee schedules for service providers, are “theoretical” for now.
“There's definitely a cost associated with the benefits provided in this bill, and we're going to approach it as a cost and not necessarily a savings,” Mr. Wilhelm said.
Todd DeStefano, president of risk management practices for Parsippany, N.J.-based York Risk Services Group Inc., agreed it's difficult to determine for now whether S.B. 863 will lead to lower costs for California's comp system.
“Our position is costs are going to go up, at least initially” Mr. DeStefano said during the panel.
A workers compensation reform bill introduced in the California Senate last week would result in a $300 million increase in comp costs for insurers and employers by 2014, according to analysis by the California Workers' Compensation Insurance Rating Bureau.