Employers will benefit from a projected savings in claims costs of $15.0 billion for policies incepting in 2006. This is in comparison to what costs might have been absent the California workers' comp reforms. This is according to the study done by Bickmore Risk Services and just released by the Division of Workers' Compensation.

In its executive summary alone, the study proves what the industry and employers have said since the beginning of 2004. The reforms are fixing the market. If not for the reforms, rates would be substantially higher for employers. It also demonstrates that rate regulation championed by many Democrat legislators is unnecessary and counterproductive.

According to the study, it's projected that the approved insurance rates have decreased by 46 percent. Starting in 2003, average rates of $4.81 per hundred dollars of payroll have decreased to $2.59 per $100/payroll during a three year span. Rates are now lower than they were in 1996.

Of the reforms, the new Permanent Disability Rating Schedule yielded the most cost savings with 40 percent. The study also backed up what producers have been saying: private insurance companies are returning to California, and more employers are able to get multiple bids on insurance policies.

Bickmore was tasked to do this study last year per a mandate in SB 899. The study was required to determine if rates were dropping sufficiently because of the reforms, or if rate regulation was needed. Despite the good news, Bickmore sounds a note of caution about the uncertainty regarding the ultimate cost of claims under the reforms.

Armies of applicants' attorneys are assaulting the reforms in the courts, and at this moment, the PDRS is being targeted for a revision. Workers' comp initiatives designed to roll back the reforms may make the November ballot, and regardless of the study, proponents of rate regulation may well revisit the issue through either legislation or initiative. This is by no means the last word.

-30-