CA Workers’ Comp Rates Rising Sharply

Workers’ compensation insurance rates are climbing sharply in California, a trend that experts attribute to the whittling away at system reforms, rising health care costs and increasing medical utilization that have helped inspire another round of recommended rate increases by California’s insurance authorities.

Arnold Schwarzenegger was elected governor in 2004, largely on the back of rapidly rising workers compensation premiums at that time. After his election, reforms were passed and premiums dropped precipitously for about seven years.

“Insurance companies are paying much higher medical and other costs than before to treat injured employees. These costs must be passed on to employers in the form of higher premiums or the system runs the risk of insurance company insolvencies, which were rampant in California at the end of the last downward cycle in 2000,” stated Greg Doherty, dietary supplement practice leader at Poms & Associates Insurance Brokers in Los Angeles.

Contract manufacturers of dietary supplement are being especially hard hit, as their rates start out high compared to raw materials suppliers or retailers of dietary supplements. “In the past 60 days two of my contract manufacturing clients have seen premium increase of 50% over last year. This story is just beginning,” predicted Mr. Doherty.