The Workers’ Compensation Insurance Research Bureau’s 2015 State of the System Report summarizes the key components of the California workers’ compensation insurance system as of mid-2015. Principal findings include:

  • Written premiums in California continue to grow at a double-digit annual rate due to higher premium rates and to growth in insured payroll resulting from economic expansion and wage level increases.
  • California has the highest premium rates in the country. California’s high rates are largely driven by the highest frequency of permanent disability claims in the country, high medical costs per claim driven by a more prolonged pattern of medical treatments, and much higher-than-average costs of handling claims and delivering benefits.
  • In both 2013 and 2014, 83% of total system costs were for indemnity and medical benefits incurred on behalf of injured workers and the cost of delivering those benefits.
  • Even after adjusting for regional differences in wage levels and industrial composition, indemnity claim frequency in the Los Angeles Basin and San Joaquin Valley areas were approximately one- fifth higher than the statewide average and indemnity claim frequency in the Bay Area was approximately one-third lower.
  • The average California medical benefit per claim is among the highest in the country with costs 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 not driven by treatment costs early in the life of a claim, but rather by the length of time a claim remains open 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 in California has grown and is among the highest in the country, average annual medical inflation in California workers’ compensation since 2001 has been well below that of other systems, reducing total medical costs by billions 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 cost reductions offset in part by less-than-projected savings in reduced frictional costs.

http://www.wcirb.com/sites/default/files/documents/state_of_the_wc_system_report_2015.pdf