Soaring Insurer Profits Leave Injured Workers Sore
Gov. Arnold Schwarzenegger's 2004 changes in California's Workers' Comp laws have been a windfall for insurance companies.
Workers' Comp insurers in California have reaped record profits over the past three years, more than triple the profits that insurers have reported in other states.
Meanwhile, only about a third of Workers' Comp premiums are paid out as benefits to injured workers in California, about half the national average.
Why the 2004 reforms still matter
The 2004 overhaul, Senate Bill 899, changed California workers’ compensation in ways injured workers still feel today. It introduced apportionment of permanent disability based on causation, which lets insurers reduce an award for any portion of a disability attributed to factors other than work. It tied permanent disability ratings to the AMA Guides, limited temporary disability to 104 weeks for most injuries, and gave employers more control over medical care through medical provider networks. Disability payments fell sharply in the years that followed, while insurers’ results improved.
The Legislature revisited the system in 2012 with Senate Bill 863, which raised permanent disability payments but also created today’s utilization review and independent medical review process. For a deeper look at how ratings work now, see our guide to permanent disability in California.
