Quackenbush eyes workers' comp rate rush.Insurance official warns of free market entry woes State Insurance Commissioner Charles Quackenbush may have campaigned on a free-market platform, but now that he is in office, he's raising flags of caution for workers' comp comp See comparison. carriers which have just entered the free-market arena. The conservative Republican former state legislator LEGISLATOR. One who makes laws. 2. In order to make good laws, it is necessary to understand those which are in force; the legislator ought therefore, to be thoroughly imbued with a knowledge of the laws of his country, their advantages and defects; to said recently he is concerned that, in the rush to lower rates, some workers' comp carriers are running the risk of insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet or are cutting back their workers' comp fraud investigation units. "I'm pleased to see workers' comp premiums going down, but they are going down so fast that we don't have the several years of loss data to see if these price levels are really adequate for the kind of losses that they are experiencing," he said. "I've got some real solvency The ability of an individual to pay his or her debts as they mature in the normal and ordinary course of business, or the financial condition of owning property of sufficient value to discharge all of one's debts. solvency n. concerns." Quackenbush said he has set up a special 20-person unit inside his department to monitor the solvency of carriers. He also said workers' comp rates would eventually bottom out. "When that happens, prices could easily shoot back up again just as quickly. It's unpredictable." Facing off over price On Jan. 1, thanks to the 1993 workers' comp reform package passed by the state Legislature A state legislature may refer to a legislative branch or body of a political subdivision in a federal system. The following legislatures exist in the following political subdivisions: n information obtained from personal accounts, examples, and observations. Usually not considered scientifically valid but may indicate areas for further investigation and research. that rates have been plummeting, in some cases as much as 50 percent from last year's levels, which were already lower due to cuts in the guaranteed minimum rate totaling 36 percent order by Quackenbush's predecessor, John Garamendi John Raymond Garamendi (born January 24, 1945) is a U.S. politician and a member of the Democratic Party. He became the 46th Lieutenant Governor of California on January 8 2007. . Quackenbush also said that the rush to lower rates has led to intense internal cost-cutting measures among carriers, including state-mandated fraud investigation units. "A major element of those cost savings was predicated on fraud prevention and detection. We are starting to see signs of a de-emphasis on fraud protection within the workers' comp carriers. As their prices scream downward, they are trying to cut costs internally and they are trying to cut their fraud investigative units. It's something that concerns me greatly. We're going to have to put some emphasis on that in our department as we see these rates come across our desk and we talk to the companies." Some companies, he said, are "taking solid staffs and cutting them down to two or three and trying to say that this is their fraud investigative unit. That causes me great distress, because once the criminal element understands that no one's looking, they are very creative people." New players expected Despite these concerns, Quackenbush said he remains committed to free-market principles for workers' comp carriers. He said that overall, repeal The Annulment or abrogation of a previously existing statute by the enactment of a later law that revokes the former law. The revocation of the law can either be done through an express repeal of the minimum rate will bring new players into the market and the pressure of competition will keep prices down. "Repeal of the minimum rate law (setting a floor on what carriers could charge) is the best thing that could have happened to the workers' comp market," he said. "I'm here to let competition rule, to let the prices fluctuate as they have to. "But at the same time, I have a solvency responsibility to make sure these carriers have the ability to pay these just claims that are made against them. It's a delicate line to walk between keeping a tight rein or being very loose." He added that because workers' comp coverage is an entitlement An individual's right to receive a value or benefit provided by law. Commonly recognized entitlements are benefits, such as those provided by Social Security or Workers' Compensation. required by law and provided by the private sector, solvency of carriers has to be maintained. Serving all 'customers' As for the Insurance Department itself, Quackenbush said he plans a big emphasis on being responsive to the customers, whether that is an individual, a company or an insurance carrier. "Under Garamendi," he charged, "responsiveness had ground to a halt. It took two years to get a certificate to operate as an insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. in the state. That's absurd. We're trying to bring competition into California. We're trying to bring more product and capacity to the state, and the companies have to wait two years to get into the state. "We're speeding that up dramatically. Rate filings are being expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex handled, be they up or down. And forms are being handled expeditiously," he claimed. For example, Quackenbush said, when he took office there were 37 auto insurance carriers which had never been told they don't owe rate rollbacks under Proposition 103. "I have told them so that they could take any losses off their books." Fine is a staff reporter with the Orange County Business Journal  An editor has expressed concern that this article or section is .Please help improve the article by adding information and sources on neglected viewpoints, or by summarizing and |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion