SACRAMENTO, Calif. (Legal Newsline)-Citing California's weak economy, state Insurance Commissioner Steve Poizner on Monday rejected an industry request that he back an increase in workers' compensation premiums.

Poizner, who is seeking the 2010 Republican gubernatorial nomination, rejected the request presented by the Workers Compensation Insurance Bureau. The industry-sponsored advisory panel had proposed a 22.8 percent increase in benchmark premiums.

The proposal would have affected policies that would have be written or renewed after Jan. 1. While Poizner's position is not binding as insurance companies are free to set their own rates, the commissioner's recommendations are followed by most insurers.

"One in eight Californians is unemployed. Countless others are also suffering and have either given up looking because they cannot find work or have taken part-time jobs while they seek full-time work," Poizner said. "Any increase in costs for employers will only make our already dire economic situation worse."

California's unemployment topped 12 in September. Poizner said the WCIRB request lacked evidence that warranted an increase.

"These increases requested by the WCIRB give insurers an excuse to raise rates in concert without fully utilizing all of their cost containment tools or increasing efficiency." Poizner said. "I will not consider an increase in the claims cost benchmark until I see substantial efforts being made by insurers to use all available tools to constrain costs and improve efficiency."

The benchmark rate in California has declined 63.4 percent since its all-time high in 2003.

In July, Poizner rejected a proposal for a 23.7 percent increase. Last year, he rejected a proposed 16 percent premium hike but approved a 5 percent increase.

In addition to Poizner running next year to succeed termed-out Republican Gov. Arnold Schwarzenegger, so are: former EBay Chief Executive Meg Whitman and former U.S. Rep. Tom Campbell.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.