State Insurance Commissioner Steve Poizner on Monday rejected an industry board’s recommendation to sharply increase workers’ compensation rates, citing the weak economy and high unemployment.

In September, the Workers’ Compensation Insurance Rating Bureau, an insurance industry actuarial and research association, recommended a 22.8 percent increase in the advisory premium rate. The group cited rising medical costs and the potential impacts of two claims appeals decisions that threaten to undo many of the cost-savings enacted in recent reforms to the system.

Under the deregulated workers’ compensation insurance system, Poizner cannot dictate rates to insurers, though they usually follow his recommendations. Insurers will decide in coming weeks how to set their rates for employer clients in 2010. The companies send their rate notices in the last two weeks of December.

Poizner, who is running for the Republican gubernatorial nomination, rejected the recommended increase. He had rejected a similar increase earlier this year.

“Any increase in costs for employers will only make our already dire economic situation worse,” Poizner said. “Given these harsh economic realities, I refuse to rubber stamp double-digit increases to the workers’ compensation claims cost benchmark.”

Poizner added he wanted insurers to fully implement the cost-control measures contained in the 2003 and 2004 reforms. “I will not consider an increase… until I see substantial efforts are being made by insurers to use all available tools to constrain costs and improve efficiency.”