California Workers Comp System Reforms Fizzled?
The California Workers Comp System was supposed to reduce costs after SB 863 was enacted in 2013.
SB 899 was the previous cost-saving measure that seemed to hold California’s Workers Comp costs which seemed to work for five to seven years.
Check out this summary page from WCAN (Workers Compensation Action Network). The surprising figures show the California Workers Comp system:
- Total costs increased by 17% from 2012 to 2013
- Was/Is the most costly WC system when comparing insurance premiums paid by employers
- Cost more than double the median workers compensation amounts
- Average ultimate cost per claim was $86.845 – which explains the increased premium cost to employers
- California employers paid $3.48 per $100 of payroll for WC coverage.
The nationwide median was $1.83. The lowest rate was North Dakota at $.88 per $100 of payroll. WC is usually measured per $100 of payroll.
North Dakota may be changing over time as many of the very unsafe oil worker jobs would have recently increased due to the oil boom in North Dakota.
In the early 2000s, a few of our California roofing clients were paying over $138 per $100 of payroll. The roofers had a very large overhead from just WC alone. I had sometimes wondered how they were able to stay afloat.
Most of this data came from the Premium Rate Ranking Summary from Oregon’s Department of Consumer and Business Services. The Oregon study, however, should not be taken as the final word on these figures.
The WCIRB – California workers comp system rating bureau- had also recommended a heavy rate increase even after the reforms were put in place.
The reason I cover the California workers comp system extensively is that many of the conundrums that are present in the state are ones that other states have faced or will face in the future.
I will cover the reasons to look further beyond this study later this week. The studies that many people base the costs of WC in the nation may be skewed.