California regulators are concerned that spiraling medical and medical-legal costs are making it more expensive to treat injured or ill workers than the state’s workers’ compensation insurance system can afford.
In a letter to state leaders sent on Tuesday, California Insurance Commissioner Ricardo Lara warned that while costs are increasing for carriers due to higher medical expenses, administrative fees, and more frequent cumulative trauma claims, the rates charged by insurers have remained low. According to the commissioner, now is the time to increase rates—before it is too late.
“California law charges my Department with issuing an average advisory pure premium rate each year based on our analysis of data on claims and cost trends,” Lara wrote in the letter. “After more than a decade of steady or decreasing rates, this year, the data supports an increase in the average advisory pure premium rate.”
California’s Workers’ Compensation System Explained
Under California law, all employers are required to carry workers’ compensation insurance, even if they have only one employee, a mandate introduced as a result of the trade union movement’s early 20th-century victories…