California State Insurance Fund to Cut Operating Costs

In a surprising move State Compensation Insurance Fund of California announced several cost cutting measures last week. Created back in 2002 to help provide affordable coverage to businesses due to out of control premiums, systematic reforms have brought down workers compensation costs to sustainable levels. Due to lower premiums State Fund is relocating offices out of pricey San Fransisco and closing offices due to lower demand for it's services. If you are currently with State Fund it might be time to call your broker and inquire about switching carriers with better service and less paperwork.

Insurance Commissioner Asks to Continue Reforms

Outgoing California Insurance Commissioner Steve Poizner used his last day in office to urge new Governor Jerry Brown to not undue the Workers Compensation reforms enacted in the last decade to reduce costs to businesses in the Golden State. The letter sent to Gov. Brown warned that the fragile economy in California would be harmed if rates started to climb back to the levels employers saw back in 2004. Let's hope that cool heads prevail and Sacramento does something to help rather than hinder our struggling economy.

2011 Rates

State Fund of California announced that rates will be going up an average of 5% in 2011. As the State's largest insurer quite a few businesses will pay more in the one of the worse economies in the country. Now is the time to contact your local broker as many more carrier's rate could be competitive and tend to be easier to work with, especially when it comes to paperwork and audits. Business owners and risk managers are always looking for a more healthy bottom line and controlling Workers Comp costs is an easy way to accomplish that.

State Fund Criminal Probe Losing Steam

Three years ago the Insurance Commissioner Steve Poizner ordered an investigation of the State Fund and allegations of misconduct and other crimes at the very top of management. Even after it was determined that State Fund board members voted to give their personal agencies the ability to sell discounted policies to their clients and also voted to raise commissions on those products, thereby enriching themselves personally, the Attorney General has yet to bring charges... and time is almost up. Why? No real answers have come from either the AG or the Insurance Commissioner who both are moving on from their respective offices in Sacramento. Why are these crooks being protected and by whom?

State Fund Shrinking

The State Fund Workers Compensation Fund of California, formerly the largest workers comp carrier in CA, is laying off 700 employees. Because of the shrinking economy here State Fund has seen its share of business drop from over 50% to 18% in the last few years. If your business is currently with State Fund now is the time to shop around for a different carrier as rates have become steadily more competitive as State Fund's dominance has waned.

Contractors and Workers Comp Fraud

A new law is being proposed in the State of California is aimed at Contractors to prevent Workers Compensation violations that some say are costing the Golden State millions when the coffers are all but empty. AB 2770 would create a commission that would catch contractors if they decide to pay workers with cash or if they claim workers aren't employees and don't pay insurance premiums. In this manner millions of dollars in payroll taxes and workers compensation insurance premiums are avoided. This doesn't just hurt the State, but also legitimate businesses would follow the laws because they are uncompetitive with firms that skirt the law. Alan Smith, who owns a business in Orange and is chairman of the National Plasterers Council, says "Sixty to 80% of whole industries are cheating," says Smith, who has owned Alan Smith Pool Plastering, which has 80 employees, for 26 years. But he says this "unbridled fraud" will soon drive him out of business. "I lose a million dollars in business each year."

Class Codes: a key to controlling cost

Small businesses in California are always looking to save money on the compulsory Workers Compensation Insurance that is required by state law. One way to make sure you aren't paying for coverage you don't need is to make sure that your employees are properly classified on the policy. Because different jobs involve different risks the rates can vary immensely. For instance, a roofing company's office employees should be classified as clerical... after all they aren't 15 feet up in the air working with power tools. The difference can be as much 10 times the cost per employee. Sitting down with an insurance professional and reviewing your employees classification is a quick and easy way to control costs and no small business should ignore this cost cutting measure in this tough economic environment.