Nearly two months after his scheduled rate hearing, California Insurance Commissioner John Garamendi finally recommends that carriers decrease rates by 15.3 percent for policies renewing and incepting Jan. 1. His recommendation is actually a little less than the Workers’ Compensation Insurance Rating Bureau shocking the industry.

The Bureau recommended a 15.9 percent decrease for January 1.

Despite what Commissioner Garamendi calls just a negligible actuarial difference, the closeness of his recommendation to the Bureau shows that he’s pushing up against the realities of the workers’ comp market at this point in time.  

Some industry experts speculate that Garamendi, with an election year closing in, was waiting until after November 8 to make the rate announcement so as to take advantage of a possible post Schwarzenegger initiative crush. But the rhetoric remains the same. The industry continues to make “whopping profits.”

“I don’t want them [insurance carriers] to hold on to the profits. I don’t think there is an employer in California that wants them to grow fat at the expense of business,” Garamendi told a group of reporters during a conference call.  

Garamendi says that California workers’ comp carriers should be posting a cumulative drop of 36.5 percent at this point, but have only posted a 26.78 percent decrease while paying out only 45 cents for every premium dollar taken in. But one profitable quarter cannot negate 10 years of losses as the industry knows only too well.