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California Insurance Commissioner John Garamendi has warned that the workers' compensation system in the state is near collapse. In July, there was an eight percent increase in workers' compensation rates; further, the Workers Compensation Insurance Rating Bureau has proposed a rate increase of 12 percent increase for January 2004. Garamendi warned that could translate into 30-50 percent increases in insurance premiums. Garamendi said reform is essential and is the number one issue for the legislature. He asserted that legislators had to get reform done this year or see the system sink. Workers' compensation is mandatory in every state except Texas and New Jersey. The rising costs of workers' compensation insurance have California employers reeling. The California Department of Insurance expects the basic cost of workers' comp. in the state to total $29 billion in 2003-a 108 percent increase in just two years. The reason for the rise in the rates is not an increase in accidents, but the increasing medical costs. The average medical cost for a workers' comp. claim has risen by 125 percent since 1997. Some employers may opt to leave the state and its high rates, or cut back on the payroll. Some industries will pass the costs onto consumers.

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June 26, 2019, 12:00 pm PDT

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