Oakland, CA – California workers’ comp private self-insured claim frequency rose 6% last year as both medical-only and indemnity claim volume increased, but a California Workers’ Compensation Institute (CWCI) review of initial data from the state Office of Self-Insurance Plans (OSIP) suggests that many of the claims may have been low-cost COVID-19 cases, as private self-insureds’ average paid and incurred losses both declined, so their total paid losses at first report fell 1.2% to $311 million, while their incurred losses fell 3.3% to just under $812 million.
OSIP’s summary of private self-insured data, issued June 6, offers a first glimpse at California private, self-insured claims experience for cases reported in 2022. It notes the total number of covered employees, medical-only and indemnity claim counts, and total paid and incurred losses on those claims through the end of the year. The summary reports on the experience of private self-insured employers who covered 2.49 million California workers last year (vs. 2.38 million in the 2021 initial report) and who reported 104,278 claims in 2022, 11.6% more than the 93,430 claims noted in the 2021 initial report.
The distribution by claim type was almost evenly split, as private self-insured employers reported 52,300 medical-only claims in 2022, up 7.2% from 48,766 in 2021; while they reported 51,978 indemnity claims, up 16.4% from the 2021 first report level. This marked the third year in a row that the private self-insured indemnity claim count has risen, as the tally went from 34,307 claims in 2019 (the last year before the pandemic) to 42,724 claims in 2020, then rose to 44,664 claims in 2021, before the addition of 7,314 more indemnity claims last year. The overall claim count for 2022 works out to 4.31 claims (2.16 medical-only and 2.15 indemnity) per 100 private self-insured employees, the highest rate in at least 16 years.
Despite increasing claim volume and claim frequency, first report total paid losses for 2022 fell 1.2% to $311 million, as total paid medical declined by $6.9 million to $149.2 million, (-4.4%), more than offsetting the $3.2 million increase in paid indemnity, which rose 2.0% to $161.9 million. The average paid loss on a 2022 claim in the initial report was $2,983, down 11.5% compared to 2021 as average medical payments per claim fell 14.3% to $1,431, and average paid indemnity fell 8.7% to $1,552. First report total incurred losses on the private self-insured incurred claims, which include paid benefits plus reserves for future payments, also fell in 2022, declining by $28.0 million (3.0 percent) to $811.8 million. Here too, the overall decline was due to the decline on the medical side, as total incurred medical fell by $30.5 million (6.1%) to $466.7 million, while total incurred indemnity showed little change, increasing by $2.5 million (0.7%) to $345.1 million. The declines in private self-insureds’ total paid and incurred losses in the face of an 11.5% increase in claim volume – which included an additional 7,314 indemnity claims – suggests an influx of relatively inexpensive claims.
CWCI notes that many of those may have been COVID-19 claims as its online COVID-19 claim application shows there were 112,298 COVID-19 claims in 2022, and 61.2% of those involved self-insured employers, including health care employers such as hospitals and large retailers, many of which are private self-insureds. The increased number of inexpensive claims helped drive down private self-insureds’ average incurred medical (-15.9%) and average incurred indemnity (-9.8%) last year, so the total average incurred per claim at first report fell from $8,988 in 2021 to $7,785 in 2022 (-13.4%).
OSIP’s summary of private self-insured’s calendar year 2022 data follows the December 2022 release of public self-insured claims data for fiscal year 2021/2022.
The private and public self-insured claim summaries from the past 20 years are posted at http://www.dir.ca.gov/SIP/StatewideTotals.html.
CWCI members and subscribers may log on to the Communications section of the CWCI website (www.cwci.org) to view a summary Bulletin with more details, analyses, and graphics.