Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

California Workers Compensation System Amazing Turnaround


California Workers Compensation System Rate Reduced Significantly In Four Years

The California Workers Compensation system rate decreased quickly over the last four to five years. While reading through a few of the online publications I receive every day, I came upon a statistic in the California Workers Compensation reform that astounded me.

Vector Graphic of Plant Dollar Sign California Workers Compensation System In Blue Color

The Rating Bureau for California (WCIRB) measures and posts various statistics on the Workers Comp system in California every six months. In 2002 and 2003, the WCIRB published Workers Comp advisory rates read like a horror novel. Senate Bill 899 was enacted and the Workers Comp rates fell dramatically over the next five years.

In my opinion, it was due to the medical treatment controls put into place. The medical provider networks (MPNs) controlled the medical treatment by employees indirectly reducing the indemnity compensation. Let’s get back to the statistics.

The average rate paid by employers is reduced in this pattern (per $100 of payroll) :

  • $6.45 – 07/03 – 12/03
  • $5.84 – 07/04 – 12/04
  • $4.44 – 07/05 – 12/05
  • $3.30 – 07/06 – 12/06
  • $2.45 – 07/07 – 12/07
  • $2.30 – 01/08 – 09/08

I did not include every six months as the list would have been rather long to read. Using some quick math, that reduces in 5 years $4.05 per $100 of payroll or a reduction of 65%. This is the same as a 4% tax break for all employers in California.

Picture Money in Money Clip California Workers Compensation System Amazing Turn around

Will the Workers Comp rates stay this low or go even lower over the next few years? That would be difficult to estimate as a few law changes or court decisions could heavily affect the California Workers Comp market.

The California Insurance Commissioner has recommended a 5% rate increase for Workers Comp policies starting on or after 1/1/2009. The WCIRB had recommended a 16% rate increase citing spiraling medical costs as the basis for the large increase. Increases in rates are normal after many years of sharp decreases in the Workers Comp insurance rates. The 16% rate increase recommendation by the WCIRB was a very surprising figure.

I will post more on California the next time as quite a few changes are coming to the Workers Comp system over the next few months.

©J&L Risk Management Inc Copyright Notice



James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


Get the latest workers' comp news FREE!

This field is for validation purposes and should be left unchanged.