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Monday, November 16, 2009, 1:25 am

Insurance: Poizner cautions against workers’ comp increases

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    Also: U.S. Labor rule would stop collection of genetic information

    ashleyheaderLast week, California Insurance Commissioner Steve Poizner stood by earlier hints that he would not accept a workers’ compensation rate increase, despite just about every sign that they should go up and already have for many.

    Steve Poizner

    Steve Poizner

    “Given these harsh economic realities, I refuse to rubber stamp double-digit increases to the Workers’ Compensation Claims Cost Benchmark,” the commissioner said in an announcement Nov. 9, adding that more can still be done by insurers to reduce front-end costs.

    The announcement was expected in many ways following an October statement by the future gubernatorial candidate that said any rate increase would have, “a devastating effect on small business,” though he did officially make a decision at the time.

    The decision to make no change to rates marks the fourth consecutive time the commissioner has rejected a suggested increase by the Workers’ Compensation Insurance Rating Bureau, which calculates changes based on losses and rates submitted by insurers. The rate recommendations are meant as a benchmark for carriers and are not mandated.

    In August, the WCRIB recommended an increase in rates of 22.8 percent, citing continued writing below the amount of losses. At the same time, the department’s senior staff counsel Christopher Citko also recommended rates increase by at least 15.4 percent.

    The commissioner said evidence suggests some measures written in the 2004 reform legislation still have yet to be fully implemented and further cost savings will result.

    “These increases requested by the WCIRB give insurers an excuse to raise rates in concert without fully utilizing all of their cost-containment tools or increasing efficiency. 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,” he said.

    ***

    Businesses will no longer be able to offer premium incentives to employees that take certain types of health surveys even if the results are not tied to the savings, according to a U.S. Department of Labor rule clarification effective Jan. 1.

    On Oct. 7, federal labor and health officials announced final regulations for the Genetic Information Nondiscrimination Act of 2008, which was passed to prevent insurers from inappropriately using genetic information to set premium rates.

    Within the recent rules, the department forbids insurers from asking for genetic information, including a family’s medical history, as part of a risk assessment even if the wellness program incentives are based solely on completing the questionnaire. The rules also prevent insurers and group health plan issuers from requesting any genetic information for underwriting purposes.

    According to the document, employers must adjust open enrollment materials and handbooks from requesting any information related to family medical history or genetics.

    Also recently, state officials handed down preliminary regulations regarding a “pay-as-you-drive” insurance program designed by insurance Commissioner Poizner last year.

    The regulations released by the Office of Administrative Law last month give permission to insurers to sell plans that are priced per mile, or prepaid mile. According to the rules, any insurer that offers such a plan must provide some kind of verification system known to the buyer and that can be used by all pay-as-you-drive buyers.

    The insurer is prevented from using or offering a verification device that tracks the location of the vehicle, except for specific purposes like identifying emergency road assistance.

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    Submit items for this column to D. Ashley Furness at afurness@busjrnl.com, 707-521-4257 or fax 707-521-5292.

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