California Private Self-Insured 2009 Claims Experience

Private self-insured employers in California reported 10,463 fewer work injury claims in 2009 – a claim count that was down 11.2 percent from 2008 — but their aggregate claim costs fell just 4.1 percent as the average amount they paid per claim rose sharply according to new data issued by the California Office of Self Insurance Plans (OSIP).

The OSIP initial summary of private self-insured data, issued September 2, provides the first snapshot of California private, self-insured claims experience for cases reported in 2009, including medical-only and indemnity claim counts, as well as total payments and total incurred losses on those claims through the end of the year. The latest report reflects the experience of private self-insured employers who covered 2.17 million California employees in 2009 (9.2 percent fewer than in the 2008 initial report), and who reported a total of 81,473 claims – down 11.2 percent from the 91,715 private self-insured claims noted in the 2008 initial report. Total wages and salaries for those employees amounted to $79.3 billion, or 3.4 percent less than the total noted for private self-insured employees in the 2008 first report.

California’s private self-insured employers reported that benefit payments on 2009 claims through the end of the year totaled $183.5 million ($69.3 million indemnity + $114.2 million medical), or 4.1 percent less than the $191.4 million recorded in the first report for 2008 claims. That decline, however, failed to keep pace with the double-digit reduction in claim volume because the average amount paid per private self-insured claim hit a 6-year high of $2,252, up 7.9 percent from the comparable figure from 2008, and 30.2 percent higher than the post-reform low recorded in 2005. The distribution of year-end paid losses on all private self-insured claims (including both medical-onlys and indemnity cases) shows indemnity payments averaged $850 for the 2009 claims, 5.7 percent more than in 2008 and 16.3 percent more than the recent low of $731 in 2006; while average medical payments on the 2009 claims rose to $1,402, up 9.3 percent from 2008 and 41.2 percent higher than post-reform low of $993 noted in 2005.

                               CALIFORNIA WC PAID LOSSES: PRIVATE SELF-INSURED CLAIMS (CY03-CY09 Payments @ Initial Reports)

The data on 2009 private self-insured incurred losses (paid amounts plus reserves for future payments) show a similar pattern, as year-end incurred losses on 2009 claims reached $580 million — only 0.5 percent less than the comparable figure for 2008, despite the 11.2 percent decline in the number of reported claims. Once again, the big reduction in claim volume was offset by increases in the average incurred cost per claim, which climbed to $7,119 – the highest level since 2003 — as both incurred medical and incurred indemnity on the private self-insured claims continued to rise.

                     CALIFORNIA WC INCURRED LOSSES: PRIVATE SELF-INSURED CLAIMS (CY03-CY09 Payments @ Initial Reports)

OSIP also compiles data on public self-insured claims, which is reported on a fiscal year basis rather than a calendar year basis, so the public self-insured data now lags the private self-insured data by 6 months. Updated data from the public self-insurers must be submitted to the state by October, so the next report on their experience should be released by early next year. In the meantime, OSIP’s annual summaries for both private and public self-insured employers from the nine most recent years can be found on its website at http://www.dir.ca.gov/SIP/StatewideTotals.html.