In the workers’ compensation
reforms Arnold introduced today, insurance companies drew a
"get-out-of-reform-free" card from the community chest. Arnold’s
proposal, known as AB 1, greatly reduces penalties against insurers
that pay workers’ benefits late and provides no regulation of the
premiums workers’ comp insurers charge businesses, despite California’s
successful history with strong premium regulation of auto,
homeowners,commercial and most other insurance under Proposition 103.
Arnold’s 150 page bill, pledged to relieve businesses of exorbitant
workers’ comp costs, regulates just about everybody involved in the
system, except the insurers even though AIG, the largest private
workers comp insurer in the state, reported 3rd quarter 2003 profits up
27%. (Of course, AIG also reported a $100,000 contribution last week to
Schwarzenegger’s Total Recall campaign.)
Under Prop 103’s insurance regulation auto insurance premiums dropped
22% in California while the rest of the nation’s premiums went up 30%.
But California workers’ comp premiums — deregulated in 1993 — have
skyrocketed in these years without insurance regulation. Ironically,
Arnold’s free pass for insurers will cost all other California
businesses a lot more than monopoly money.