"This, by any measure, is a remarkable turnaround for a system that was without question broken just a few short years ago," he said.

In making his recommendation, however, the commissioner criticized insurers and the state Workers' Compensation Insurance Review Board (WCIRB) for not keeping rates in line with the changes in costs they have experienced.

"Many insurers have been slow to fully implement my recommended reductions and pass on the savings as rapidly as possible," he said. "It is past time for the savings from reforms to be passed along to overburdened employers and injured workers."

Insurers have argued that much of the decreases in costs the commissioner has based his recommendations on are still projected decreases, and that the industry is still recovering form a decade in the red.

Nicole Mahrt, a spokesperson for the American Insurance Association in Sacramento, said that Mr. Garamendi has, "estimated savings earlier than they actually occurred."

Additionally, she said, the workers' compensation market is "still in an environment of uncertainty," noting that lawsuits challenging the reforms enacted last year are still in process, with the most recent suit against the new permanent partial disability ratings filed just last week in California State Supreme Court.

Mr. Garamendi argued, however, that cost reductions have materialized.

"We now know, without speculation, that the reforms are working effectively, that costs are dropping, and that insurers are realizing savings," he said.

In addition to the commissioner, the WCIRB also makes a pure premium recommendation, and has also recommended rate reductions in the past. Mr. Garamendi criticized the board, however, for being too close to the insurance industry and to slow to recommend rate reductions.

"The Workers' Compensation Insurance Rating Bureau, an organization comprised of industry representatives that is charged with projecting future costs, has consistently recommended reductions to the pure premium rate that have not kept pace with the actual decrease in claims costs," he said.

Ms. Mahrt countered that while insurance representatives are a part of the WCIRB, there are also members representing the public, labor, and the applicants' attorneys that represent injured workers.
"The industry is required to report data to the bureau, but it does not control it at all," she said.

Sam Sorich, president of the Association of California Insurance Companies, the Sacramento-based western affiliate of the Property Casualty Insurers Association of America (PCI), defended the bureau's recommendations.

"The rating bureau recently recommended another 13.8 percent decrease in rates, effective next month. This recommendation is sound and reflects, through actuarial evidence, the best available estimate of the reforms' impact so far," he said.

"At this point, we are not certain how the commissioner has reached the mathematical conclusions that resulted in his rate recommendation." Mr. Sorich added, however, that the ACIC would be "reviewing" the commissioner's analysis.

Pure premium rate recommendations are advisory, and insurance companies are under no obligation to follow them. Ms. Mahrt noted that some companies will reduce rates further, and others will offer smaller reductions based on their books of business.

"They have to make sound, actuarially based decisions," she said. "They have to make decisions based on facts. They can't use politically motivated, illusory numbers."