Live CA WCIRB Webinar On State Of California’s Work Comp System

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CA WCIRB Webinar

The following is a great live CA WCIRB webinar that was typed in as it happened.

Please excuse any typos, weird language as I am typing this live as I hear it.   Thanks for the understanding.

Map Of Live CA WCIRB Webinar With California Quail
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Check back often as this blog will keep updating, if things go as planned.I will try to input info that will not be in the written report provided by WCIRB.

There were a few technical difficulties (as in 99.9%of webinars) with the sound.   Everything is A-OK now.

The Agenda for today is:

  • Employer Costs
  • Cost Distributions
  • Cost Drivers
  • Senate Bill 863
  • Insurer Results

Employer Costs – 

Total Premium estimated for 2014 16.3 Billion, steady double digit increase since 2006

Most of the increased Employer Cost Factors are from increases in what premium carriers charge employers

Average charged payrolls are the same as the 1970’s(?)   – $2.97 per $100 of payroll

California has always had a higher charged rates when compared to the national average.

Graphic Of Human Head Live CA WCIRB Webinar With Dollar an Question Mark
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Published rate (average) are extremely high for Transportation and Utilities  – almost $10 per $100.  That is normal for most states- Transportation is usually highest or almost the highest

Cost Distributions

Medical benefits – 37% of total comp payouts – very similar to most states.WCIRB actuaries say Permanent Disability benefits will increase sharply over the next few years.

The largest growth in medical payments – is medical payments made to employees

Cost Drivers

Accident rates are much lower than n the 1990’s with a high in 1991 of 5% of all employees filing a WC claim for indemnity – Frequency has fallen to under 2%- possibly due to CA becoming a service-oriented state

Indemnity claims frequency was highest in central California.   Los Angeles area is starting to increase in the 2012 data.

As compared to NCCI data, since 2012, CA has had a much higher rate of  claims reported.

As expected, California has much more Permanent Disability rate on indemnity claims = 47%   There are actually six states higher than CA.   South Carolina is a surprise state.

Indemnity claim severity has been flat for CA since 2005.

Medical costs increase on indemnity claims have increased by 500% since 1991.   The recent medical costs have leveled off for the most part.

CA is highest on the Incurred Medical Benefits per indemnity claim except for Delaware and Alaska.

Allocated Loss Adjustment Expenses (ALAE) have actually increased since SB 863 as WCIRB had projected a 6% reduction.  ALAE expenses actually grew 6 – 9% in 2013 – alarming.

Flag of Live CA WCIRB Webinar California
Wikimedia commons – Makaristos

Senate Bill 863 (SB 863)

Liens seem to be the only positive result so far when compared to the WCIRB’s  forecasts.   However, it is much too early to really have any full assessments of the involved factors.

Participant questions- Will the legal push-back on lien affect costs?  Yes, but unknown effect,

Any surprises from SB 863?   Basically, no reductions in SB 863 frictional costs which was the reason for enacting the bill.

Overall Outlook

CA has very high volatility on profitability, but still indicates some profitability.

Summary – I will cover this more in depth next week.   (Slide 37)

Final Participant Questions – Does/will the Affordable Health Care Act affect CA WC?   – Still studying the matter, supply and demand on health care access, workers may not try to shift a health claim to WC if they have health insurance instead of being uninsured – premature estimations

SB 863 question – Forecast on ALAE?   Alarming increases instead of projected decreases. There are many possible changes that may decrease frictional costs.

Any info on Physician Dispensed Medication?   WCIRB released report late last year on this subject.

Overall – a good webinar.  This live CA WCIRB webinar went well and covered a very difficult subject.

©J&L Risk Management Inc Copyright Notice

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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

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