Commissioner approves workers' comp rate cut; $4 billion saved since '93 reforms.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Oct. 29, 1996--Insurance Commissioner Chuck Quackenbush has approved a 6.2 percent reduction in workers' compensation insurance costs, which translates to anticipated savings of $316 million for California's businesses next year.

The decision means that the state's economy will continue to reap the rewards from reform legislation that is responsible for employers paying $3.9 billion less in workers' comp premiums in 1995 than they did in 1993. California's commitment to workplace safety and fighting workers' comp fraud have also contributed to the savings.

``Workers' comp reform is a success story in which California can take pride,'' the Commissioner said. ``Just three years ago, businesses were packing up and heading for the borders to escape California's wasteful and fraud-ridden workers' comp system.

``The legislature came to grips with the problem and acted decisively to stop the abuses that were draining jobs and resources from our economy. Forcing insurance companies to compete like other businesses was the added ingredient that made it possible to achieve maximum savings.''

Effective Jan. 1, 1995, the law de-regulating workers' compensation rates directs the Insurance Commissioner to approve advisory loss costs, which reflect the actual costs of paying and adjusting workers' comp claims in each of 500 job classifications.

Insurers take into account their own loss experience as well as market conditions when setting rates, but consider advisory loss costs as a statistically reliable indicator of costs and trends. The 6.2 percent decrease represents the average statewide cost reduction in all job classifications.

California employers paid $9 billion for workers' compensation insurance in 1993. In 1995, they paid $5.1 billion, the lowest total since 1985.

``California's experience reforming the workers' compensation system serves as a reminder of what can be accomplished when lawmakers exercise leadership to cut the fat out of a wasteful and inefficient system and allow the free market to compete for our business,'' Quackenbush said.

``The lessons we've learned by attacking our problems with workers' compensation can and should be applied to automobile insurance and other lines of insurance.'' -0-

NOTE: Visit the Department of Insurance Web site at http://www.insurance.ca.gov. Nonmedia inquiries should be directed to the Consumer Hotline, 800/927-HELP.

CONTACT: California Department of Insurance 

Richard Wiebe, 213/346-6300

Sheri Inouye, 213/346-6370