California's Workers Comp System Is Shorting Employers

We have been very fortunate to have a large amount of our premium and reserve review services in California. I feel the employers in the state are not necessarily being treated fairly. The reason is the look-back period has been shortened severely in California. This is unfortunate as CA policies seem to have the highest error rate.

In California, the employer may only have their Workers Comp policies and audits reviewed for one year in the past. Most states allow a three year look-back period. I have had to explain this conundrum to more than a few aggravated California employers. Basically, when a mistake is found, that mistake may possibly be in triplicate in other states. A small error turns out to more significant when tripled.

Is it still worth the effort to review Workers Comp policies and premium audits in CA? Yes, as once the error is found, it usually becomes a permanent fix for the future. Our largest single error was found in a California Workers Compensation audit.

A Disadvantage in CA Workers Comp Policies

California has changed their rating rules quite often over the last few years. After attending many of the WCIRB conferences, I noticed that the CA rules for rating Workers Comp policies is becoming very similar to the rating regs 0f the NCCI.

One area that is very unfair to CA policyholders is the limitation of the lookback period if a mistake is found in an employer's Workers Comp policy. If the employer is owed a refund, they can only ask for a refund from their insurance carrier for one year in the past and the present year. Most states allow for a lookback period of three years and the current year.

What does that mean to CA employers? If you find an error in your Workers Comp policy that results in a refund, you will only be entitled to approximately 50% of what is received by employers in other states. CA Insurance Commissioner Poizner will hopefully be able to modify this rule. If an employer has been overpaying for many years, why should there be a refund limit of only one year in the past and not three?