Legislative efforts to overhaul workers' compensation have reduced benefits to injured workers, but many small employers say savings have not trickled down to them.
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| Cariño Casas / The Business Press |
| Silvia Gonzalez once managed the Inland Empire School of Optics, which retrained injured workers as opticians. |
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The small-businesses owners' reactions come as surveys suggest workers' compensation insurance rates have been trimmed significantly across the board.
In Union Bank of California's Annual Small Business Survey released March 2, 56% of small-business owners said their workers' compensation premiums remained the same this year compared with 2005. Twenty-nine percent said their premiums increased, while 15% said their premiums decreased. The survey included responses from almost 2,000 California small-business owners.
Union Bank of California's survey contrasts with the state's data.
Workers' compensation insurance rates dropped 46% from July 2003 to January 2006, the lowest prices in 10 years, according to a study compiled by Bickmore Risk Services. The study was mandated by Senate Bill 899, which was enacted in 2004.
SB 899 created new guidelines for medical examination of injured workers and mandated a study to evaluate of insurance premium rates.
Recent state surveys are flawed because they do not match the perceptions of small-business owners, said Charles Cleveland Jr., a workers' compensation specialist at Cleveland & Metz in Rancho Cucamonga.
"It's like saying there are no problems going on in Iraq and Iraqis all love democracy," Cleveland said.
Cleveland has five employees and his annual $6,000 workers' compensation insurance premium remains unchanged from previous years, he said.
"Small businesses are upset and workers are upset because their benefits have been cut. I think there should be more regulation. Workers' compensation is one of the few types of insurance not regulated by the Department of Insurance. Without regulation, there is not going to be any rollback," Cleveland said.
The state's workers' compensation reforms significantly reduced claims, but pushed some businesses to their limits.
Hermann Atencio owned and managed four vocational-rehabilitation schools, called Inland Empire School of Optics, that specialized in training injured workers to be opticians. Tuition was paid through workers' compensation benefits, but enrollment began to level off last year. Three of the four schools have since closed, Atencio said.
"It decimated our industry," he said. "We seldom get calls."
Atencio is converting his business into a home care health service, he said.
Workers' compensation insurance providers weigh several factors when determining the premium rates they charge, including the industry, previous accident claims at the company and the number of employees at the business.
Blue-collar industries, such as construction and roofing, pay the highest workers' compensation premiums because of the high probability of serious injury associated with those jobs.
The state Department of Insurance only reviews a company's workers' compensation rates, said Susan Gard, spokeswoman for the state Division of Workers' Compensation. Insurance providers are not required by the Department of Insurance to adjust their rates.
"Not all individual employers are going to enjoy all of the savings because of the number of accident reports about the employer and the risk factor in their company," Gard said.
Employers may overlook information in their policies that contributes to unchanged or higher premiums compared with previous years, said Michael Murphy, an insurance broker and owner of Workers Compensation Specialists Insurance Services in Chino.
"The rates are definitely declining," Murphy said. "I see it in my commissions and my premiums. I think it has dropped significantly and that is probably due to the reforms in the claims plus the re-entry of private [insurance] carriers into the state," he said.
