"The State Fund insures more than half of California's employers, and those employers will barely notice this measly reduction," said Schwartz. "Injured workers' compensation and medical care have been gutted, but insurers continue to conduct business as usual."

Schwartz also criticized Governor Schwarzenegger for "making up facts to suit his wish that rates would be reduced by cutting injured workers' benefits. It hasn't happened, and the governor has resorted to fiction. The majority of California employers have seen little or no relief. The average rate cut has been less than 10%, after increases of as much as 300%."

The governor stated on "Larry King Live" earlier this month that "Now the costs [of workers' compensation insurance] have already gone down an average of 70 percent to 20 percent. Next year they will go down further."

The injured workers' advocates earlier this month asked the Insurance Commissioner to make four changes in the proposal submitted by the industry rating bureau:

1. Drop the assumption that more claims will be filed in 2005
Claims frequency has been cut in half since 1991, yet the industry still assumes that more claims will be filed in 2005.

2. Drop the industry assumption that medical and other claim costs will continue to climb
Recent cuts have already caused medical and other claim costs to drop, flatly contradicting the industry assumption that these costs will continue to climb.

3. Account for the reduction in permanent disability benefit weeks for virtually all workers
The industry's filing did not take this cut into account.

4. Drop the industry's assumption that the cost of adjusting claims will rise significantly next year
The purpose of the recent legislation was to make claims more consistent and predictable, which will reduce adjustment expenses.

"The governor and the legislature have taken away benefits from injured workers, benefits that are already too low. You can keep on cutting injured workers' benefits down to zero, and without regulation insurance companies may not reduce premiums by a single dollar," said Schwartz.

Although some insurance companies suffered large losses from the unprecedented four hurricanes that devastated Florida early this fall, results from other business - including California workers' compensation - continues to provide fat profits. AIG, for example, one of the largest workers' compensation insurers in California, reported that net income for the first 9 months of 2004, excluding the hurricane losses, reach a record level of $8.03 billion, an increase of 22.3% over last year. The American Financial Group, parent of the Great American Insurance Group) a top 10 write in California workers' compensation insurance), reported that profits form insurance operations excluding catastrophic losses increased from $109 million to $149 million from the first 9 months of 2003 to 2004. Great American continues to operate at almost a 10% profit level even before considering investment income.