Archived: Don’t Hike Workers Comp Rates

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Businesses in California have yet another reason to look carefully over their shoulders. In the middle of this very difficult economy, a state advisory board has recommended a nearly 25 percent hike in workers’ compensation rates. The recommendation underscores the precarious survival of the 2004 workers’ compensation reforms passed by the Legislature and signed by the governor.

Remember 2003? Workers’ compensation costs had jumped to $21.8 billion from $6.8 billion in 1997. Businesses faced double and triple-digit annual rate increases that crippled many companies and gave California a terrible rap for having the highest workers’ compensation rates and one of the worst business climates in the nation. Fortunately, the governor and state Legislature acted to fix the broken system.

California businesses have saved about $40 billion since 2004 because of these reforms, which reined in costs and reduced litigation. Workers’ compensation rates dropped by 60 percent and the state moved from 1st to 14th in terms of overall costs to employers. It was the most important business reform in California in decades and kept thousands of jobs in the state.

The California Workers’ Compensation Insurance Rating Bureau’s recent recommendation to raise rates by nearly 25 percent could not come at a worse time for businesses and our economy. At a time when nearly every business is facing declining revenue, rising costs for workers’ compensation insurance will make it more challenging for employers to retain their talented staff.

It is clear that part of the lasting solution for the rising cost of workers’ compensation insurance lies with health care reform that takes costs out of the system. As the federal government is addressing this issue, California must make every effort to keep from sliding back into the workers’ compensation money pit that will stifle our job creation and economic recovery.

The good news is that State Insurance Commissioner Steve Poizner has tempered previous attempts to raise rates. This time he has pledged to carefully evaluate every aspect of this recommendation and make a decision that’s in the best interest of the state’s employers and employees.

These are extraordinary times that demand both bold action and careful treading — but mixing up the two can be disastrous. We hope that Insurance Commissioner Poizner and state elected officials opt for careful treading on workers’ compensation rate increases and bold action on health care reform.

And that’s The Business Perspective.

The Business Perspective is a weekly opinion piece by Gary Toebben, President & CEO of the Los Angeles Area Chamber of Commerce, produced with the input of Samuel Garrison, Vice President of Public Policy.

Posted - Copyright © 2022 Eastern Group Publications, Inc.

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1 Comment


  1. ITS ABOUT TIME THAT INJURED WORKERS GET WHAT THEY HAVE COMING INSTEAD OF THE EMPLOYERS YOU GUYS HAVE BEEN MILKING IT FOR YEARS ITS PAYBACK TIME.

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