NU Online News Service, Oct. 17, 12:13 p.m. EDT
California workers' compensation insurers, which have been hurt by increasing underwriting losses over the past three years, should benefit from two bills signed into law recently, and from several bills opposed by the industry that were not signed, according to Moody's.
In its Weekly Credit Outlook, Moody's says AB 378, one of the two bills signed, represents the "biggest positive effect for insurers," as it establishes a fee schedule for compound drugs. "Until now," says Moody's, "the state's workers' compensation fee schedules excluded these drugs, whose usage and costs increased at a much higher rate than other pharmaceuticals…and essentially created a billing loophole."
Moody's notes that prescription drugs make up approximately 20 percent of total workers' comp medical costs, "so cost containment on this front is important for the industry."
Another bill, SB 684, limits the ability to move workers' comp disputes outside the state, but Moody's says the bill has "little credit implication for the industry."
However, the rating agency says four bills vetoed by Governor Jerry Brown "would have significantly increased costs on insurers, so their veto is a boon."
The bills included a new licensing requirement for physicians conducting workers' comp reviews, a requirement to provide vouchers for work training, an extension of temporary disability payments and new anti-discrimination rules, Moody's says.
The rating agency says of the bills, "These generally positive outcomes for the insurance industry are particularly important in the context of the industry's currently very poor workers' compensation results, especially in California, which makes up 11 percent of the workers' compensation market."
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
