California Insurance Commissioner Steve Poizner announced yesterday that he would make no change to the average workers' comp pure premium rate for policies renewing and incepting on or after Jan. 1, 2008. In a news release, Poizner said that insurers had realized a 70 % reduction in costs since 2003, savings that they should be able to pass on to employers in the form of lower premiums. Poizner said that, in his opinion, premiums are "still too high."

This is the first time since the implementation of the reforms that a commissioner has held the line on rates. Commissioner Poizner approved a rate decrease of 14.2 % for July 2007.

This announcement appears to be an indication that workers' comp costs within the post reform environment are stabilizing, especially the cost of claims. The Bureau recommended a 5.2 % increase for January after a series of steady reductions during the last three years.

"The commissioner is seeing loss costs in the pure premium reflect the bottom line of system savings up to this point. If we see any changes to the permanent disability schedule...we may have to take a closer look," says one industry insider. The Division of Workers' Compensation said earlier that it would make changes to the PDRS in March 2008, a move that many observers predict will increase system costs.

Poizner noted in his order that "California insurers' record-low loss ratios ... [are] far lower than what insurers are experiencing in the rest of the country. A change in pure premium rates, without further current data, is not warranted in light of the substantial profitability the workers' compensation insurance industry is experiencing in California."

For a copy of the commissioner's decision and order, please go to the "Resources" section of our website: www.wcexec.com.

-30-