California Insurance Commissioner Ricardo has issued new workers’ compensation regulations. The regs are in response to the COVID-19 pandemic. He is ordering insurance companies to do a new computation on premiums for policyholders. Lara wants insurers to come up with premiums that reflect the reduced risk of loss for most businesses.
Lara said the reason for his order is that many businesses are struggling financially because of the pandemic.
“California’s business owners have been hit hard by COVID-19,” Lara said. “Workers’ compensation premiums should reflect that many employees are performing less risky duties, and my order will provide some financial relief for employers when they need it most.”
Under Lara’s earlier released regulations employers can reclassify an employee if their duties change to a clerical classification that has reduced risk. He says this reclassification should reduce the premium charged to the employer. In many cases it’s because the employee is working from home when they didn’t do so before the pandemic.
Lara’s edict goes into effect on July 1, 2020 and is retroactive to March 19, 2020 when Governor Gavin Newsom issued a statewide stay-at-home order. It will finish 60-days after that order is lifted.
Mark Hebert of the California Small Business Majority is one of many business groups that like what they see.
“These new rules will allow small business owners to correctly reclassify their workforce if their duties have changed, helping businesses keep more money in their pockets as they respond to a decline in revenue and adapt their business models,” Hebert said. “These rules will also ensure small businesses are better positioned for the long-term by protecting them from future increases in workers' compensation premiums due to COVID-19. This kind of smart action will ensure our state's job creators and innovators have the tools they need to succeed after this crisis.”
There are 50 insurers offering work comp in California. All will be impacted. Among them are Travelers Cos., Berkshire Hathaway, AIG, Chubb, W.R. Berkley and Zurich.
At this point the insurers have not issued comments on Lara’s order.
Source Links: California Department of Insurance
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