Insurance: Proposal for 16% increase in workers’ comp cut to 5%

<p>California Insurance Commissioner Steve Poizner snubbed the workers’ comp rating bureau’s recommended rate change for a third consecutive time last month, though he did concede that some increase is needed.</p><p>The Workers’ Compensation Insurance Rating Bureau, which is the agency responsible for recommending workers’ comp pure premium rate changes to the Department of Insurance, told the commissioner early this fall that actuaries showed a need for a 16 percent increase in rates.</p><p>The bureau’s recommendations for an increase of 4.2 percent last October and later 5.2 percent were both slapped down by the commissioner, but for the first time in several years Mr. Poizner agreed to approve an increase, but at 11 points below the bureau’s suggestion.</p><p>“Last year, experts predicted that loss adjustment expenses would increase dramatically. They did not,” the commissioner said. “This year, experts have predicted accelerating increases in medical costs. Given the accuracy of past forecasts, I will wait for clear and compelling data confirming such increases.”</p><p> The approved 5 percent increase recommendation is meant to be used as a benchmark for insurers, though carriers are not forced to follow the advice. The recent recommendation would apply to policies beginning Jan. 1, 2009. The commissioner has approved pure premium rate reductions totaling 63 percent in the past five years.</p><p>Also last month, former external affairs coordinator for the office of the governor, Heather Lambert, was appointed new deputy insurance commissioner for community relations.</p><p>In the governor’s office, Ms. Lambert served as a liaison between the public safety, business, education and local government communities. In the past, she also worked in various positions with the Department of Consumer Affairs, Governor’s Office of Planning and Research, Department of Homeland Security, Office of Emergency Services and others.</p><p>* * *</p><p>State Compensation Insurance Fund will host its first public board meeting in 94 years Thursday after the Legislature passed sweeping reform measures last session.</p><p>Assembly Bill 1874 and Senate Bill 1145 implemented a series of reforms, including corporate management changes and new transparency rules and public meetings. </p><p>The board of directors, which now includes 11 members, up from five, will meet from 4 p.m. to 7 p.m. Thursday at the Milton Marks Conference Center in Monterey. A second public meeting will take place the following day from 8:30 a.m. to 5 p.m. at the same location.</p><p>State Fund is a nonprofit, semi-public agency responsible for workers’ comp coverage for about 190,000 employers and has premium volumes of about $1.6 billion a year.</p><p>The legislative reforms resulted after the firings of former State Fund President James Tudor and Executive Vice President Renee Koren in March 2007.</p><p>* * *</p><p>A large number of homeowners said they will reduce the insurance on their homes this year because of falling values, according to a study released this month by the Insurance Information Network of California.</p><p>More than a fourth of 800 randomly selected respondents told interviewers they intend to reduce their insurance coverage this year because the resale value of their home has dropped, something researchers said could be a dangerous assumption.</p><p>“This is a financially dangerous myth,” said Insurance Information Network Executive Director Candysse Miller. </p><p>“Just because the resale value of your home may have declined does not mean that the cost to rebuild it has also dropped – and that should be your target.”</p><p>A larger portion of respondents, 43 percent, said they would not reduce coverage because of decreasing value, and another 35 percent said they would look to save money by shopping around this year but not decreasing coverage all together.</p><p>The survey was conducted from Sept. 21-24 and is available at www.iinc.org.</p><p>* * *</p><p>Farmers Insurance Group of Companies launched an insurance Web site specifically targeting women last month called “Taking Away the Worry.” The site located at www.takeawaytheworry.com is divided into five sections: single, single with child, couples with no children, couples with children and older adults with grown children. It includes insurance planning resources but also business and financial planning tips as well as other topics related to family and well-being.</p><p>* * *</p><p>Novato-based Fireman’s Fund Insurance became the first insurance industry Energy Star partner this month, which will work along with its suite of green coverage products. </p><p>“Teaming up with Energy Star gives Fireman’s Fund the opportunity to help customers earn the Energy Star rating for their top-performing buildings and set realistic energy performance goals for new construction projects,” said Steve Greger, green loss control director for Fireman’s. </p><p>“Using the EPA guidelines for energy management helps our customers reap the benefits of superior energy efficiency.”</p><p>The Environmental Protection Agency developed the Energy Star program in 1992 as a voluntary, market-partnership-based approach to reducing energy usage.</p><p>Commercial buildings and homes with green policies will have their buildings constructed according to Energy Star ratings in the event of a loss.</p><p>•••</p><p>Submit items for this column to Ashley Furness at afurness@busjrnl.com, 707-521-4257 or fax 707-521-5292.</p>