It’s been a tough year for small businesses in California. But thanks to Insurance Commissioner Steve Poizner, 2010 could be a little brighter because the members of our small business organization are less likely to be saddled with increased workers’ compensation insurance costs of as much as 23 percent.
Poizner recently stood up to the Workers’ Compensation Insurance Rating Bureau (WCIRB), an insurance industry financed organization, by rejecting its call for a 22.8 percent rate increase in workers’ comp premiums. That would mean the costs of covering the hundreds of thousands of our member’s employees would jump almost 25 percent. And that’s just the average – some of our members could have seen rates jump much higher.
It’s no secret that higher operating costs means less job creation and could eventually lead to further layoffs, adding to the state’s already record-high unemployment rate.
That’s why small businesses whole-heartedly support Commissioner Poizner and his courage to stand up to the insurance industry — especially when they continue to fail to live up to the belt-tightening practices that other businesses in California have been forced to implement during these tough economic times. In June, Commissioner Poizner made 27 recommendations to all the players in the workers’ compensation insurance system to increase efficiencies and, therefore, lessen the necessity for such a dramatic spike in premiums.
Commissioner Poizner refused WCIRB’s latest rate increase recommendation because many of his suggested reforms have not been implemented. He said, “I will not consider an increase in the Claims Cost Benchmark until I see substantial efforts being made by insurers to use all available tools to constrain costs and improve efficiency.”
We strongly agree. Insurers should cut costs and strive to be as efficient as the small businesses they underwrite.
Now, we’re under no illusion that there won’t be future increases. Commissioner Poizner can only advise companies to raise or lower their rates and cannot order them to do so. Companies are free to set their own rates, but typically the industry has followed his lead – and they should continue to do so.
In June, the WCIRB recommended a 23.7 percent increase. After careful analysis and scrutiny, Commissioner Poizner rejected that request as well, noting at the time the industry’s failure to control costs. It’s apparent that insurers still have not gotten his message. But we encourage Commissioner Poizner to keep repeating that message and keep rejecting industry calls for increased workers’ comp rates on California’s small businesses. Lower rates will lead to job creation, and that means more tax dollars flowing to the state’s coffers.
It’s just plain good business. And we have Commissioner Steve Poizner to thank for that.