1993: During Gov. Pete Wilson’s administration (1991-1999), amendments to the Compensation Reform Acts of 1989 include limitations on compensability of psychiatric injuries and administrative penalties for substandard claims administration. Injured workers are advised how to get benefits without an attorney. Expenses of vocational rehabilitation are limited to $16,000. Also created in the 1990s are a Workers’ Compensation Revolving Fund, to be partially financed by assessments on insurers and self-insured employers, and a Health and Safety Commission.
Legislation enacts a new round of reforms to workers’ compensation. Minimum rate laws will be repealed, effective in 1995. The new “open rating” plan sets off a period of intense competition among private insurers. While we maintain adequate rates, many carriers slash rates below cost. Thousands of employers leave us for private carriers offering low, and unsustainable, rates.
1995: Kenneth C. Bollier replaces Jack Webb as President.
In the “minimum rate era,” which began in 1915, the state set a floor on the cost of workers’ compensation rates. Insurance carriers could charge rates at or above the state-approved rates. Under “open-rating,” which begins in 1995, the state adopts pure premium rates, which are advisory. Insurance companies that meet the state’s solvency standards are generally free to charge above or below the state-adopted rates.
1996: Gov. Pete Wilson commissions a consulting actuary firm to study the feasibility of “privatizing” State Fund. The business community roundly denounces privatization, and the governor abandons the proposal.
1999: Comprehensive reform bills are passed, but vetoed by the governor.