San Francisco, CA – The WCIRB has released its 2015 Report on the State of the California Workers’ Compensation Insurance System (Report). The Report summarizes the cost of California workers’ compensation insurance based on premiums paid by insured employers, shows how premium dollars are distributed among various system components, and identifies key cost drivers such as frequency and the average cost of claims. The Report also contains a brief summary of how post-Senate Bill No. 863 (2012) costs are emerging compared to initial projections.
Principal findings include:
- Written premiums in California continue to grow at a double-digit annual rate due to higher premium rates and economic growth.
- California has the highest premium rates in the country, largely driven by the highest permanent disability claim frequency in the country, prolonged patterns of medical treatment, and much greater-than-average costs of handling claims and delivering benefits.
- In both 2013 and 2014, indemnity and medical benefits, and the cost of delivering those benefits, represented 83% of total system costs.
- The Los Angeles Basin and San Joaquin Valley areas show indemnity claim frequency rates that are 20% higher than the statewide average, while the Bay Area in Northern California is approximately 30% lower than average.
- The average California medical benefit per claim is more than 90% above the countrywide median; however, recent favorable trends in California medical severities suggest that the differential will moderate.
- The high cost of medical benefits in California relative to other states is driven by the length of time claims remain open in the State and medical benefits are paid.
- California has the highest ratio of loss adjustment expenses to losses in the country.
While the cost of medical cost containment programs has grown, California’s average annual workers’ compensation medical inflation has been well below that of other systems, reducing total medical costs by billions of dollars from what they otherwise could have been.
Senate Bill No. 863 impacts have generally been emerging consistent with initial WCIRB projections with potentially greater than projected savings in medical costs offset in part by less than projected savings in reduced frictional costs.
In recent years, California workers’ compensation combined ratios have generally been higher, and returns on net worth lower, than countrywide averages.
The Report authors will conduct a live webinar today, August 5, 2015 to discuss these findings and answer questions. Registration information is shown below. The webinar is open to the public but attendance is limited to 100 attendees. A recording of the webinar will be posted to the WCIRB website for those who cannot attend the live presentation.
Click here for the full report: CA WCIRB Annual State of the Workers’ Comp System Report (PDF)
Date: August 5, 2015
Time: 10:00AM – 11:00AM PT
Source: CA WCIRB