Increase in Insurance Costs Squeezing Businesses
San Francisco Chronicle
September 8, 2002

You wouldn't expect Rich Chicotel and Bud Sydenstricker to have a shared business headache. Chicotel is the chief financial officer for the Shorenstein Co. the largest office landlord in San Francisco and one of the nation's biggest real estate firms. Sydenstricker runs a small residential cleaning service in San Francisco called Maid Perfect.

But both have seen their businesses walloped by huge insurance rate increases after Sept. 11.

Workers' compensation insurance for Sydenstricker's 19 employees has risen from 11 percent of his gross payroll two years ago to 27.5 percent this year. "It's very nearly put me out of business," he said. He's cut costs everywhere he can, reducing staff through attrition, moving his office into a cramped studio apartment, sticking with obsolete computer equipment.

And still, "I'm not making enough money to live this way," he said. His next move might be to change the entire nature of his business to a cleaning referral service that hires independent contractors so he won't have to pay for workers' compensation.

. . .

In July, about 60 consumer groups banded together to form Americans for Insurance Reform, which urged state insurance commissioners to investigate whether insurers are price gouging consumers and to take steps to smooth out the industry's cycle of low prices followed by steep increases. On Thursday, the National Association of Insurance Commissioners said it would study the new group's recommendations.

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