HomeNewsPress ReleaseInitial Reports Suggest Recent Decline in California Workers’ Comp Public Self Insured Claims and Loss Costs


Bob Young

For Press Release:

Initial Reports Suggest Recent Decline in California Workers’ Comp Public Self Insured Claims and Loss Costs

Preliminary results show total paid and incurred losses on California workers’ compensation public self-insured claims declined for the fiscal year that ended June 30, as the number of claims and the average medical and indemnity loss per claim all fell according to a California Workers’ Compensation Institute analysis of initial data on FY 2012/13 claims released by the Office of Self Insurance Plans (OSIP) last week.

OSIP’s summary of public self-insured data provides the first look at the workers’ comp experience of cities, counties, and other public self-insured entities for the 12 months ending June 30 of this year, including the number of medical-only and indemnity claims filed, as well as total payments and total incurred losses on those claims. Compared to initial summaries from earlier years, the new report shows California’s private self-insured work force remained at about 1.9 million workers last year, with wages and salaries for those employees totaling $96.7 billion. All together, the public self-insured employers reported 116,701 claims last year, 1,911 fewer than in the 2011/2012 initial report, the sixth year in a row that the number of claims in the initial report has declined.

The initial data on FY 2012/13 public self-insured claims show aggregate payments totaled $317.7 million ($163.1 million indemnity + $154.6 million medical), down 6.4% from the $339.5 million total recorded in the initial report for 2011/12 claims. That works out to an average payment of $2,722 for the 2012/13 claims at the end of the fiscal year, a 4.9% drop from the comparable figure from FY 2011/12, but 24.6% more than the post-reform low of $2,185 noted in the FY 2005/06 first report. A breakdown of the average payments reveals that public self-insureds averaged $1,398 in indemnity payments on FY 2012/13 claims, down 3% from the first report for the prior year, but still nearly 26% more than the post-reform low of $1,112 in FY 2005/06; while average medical payments on the latest claims fell to $1,325, down 6.8% from FY2011/12 but 23.5% more than the post-reform low of $1,073.

The first report data on incurred losses (paid amounts plus reserves for future payments) show a similar pattern for public self-insured claim costs. Aggregate incurred losses on the FY 2012/13 claims totaled $1.03 billion, 5.8% less than the first report total from the prior year, but nearly $181 million more than the post-reform low of $853 million noted in the initial report for FY 05/06 cases. There were 1,911 fewer public self-insured claims in the latest report than in the initial report for FY 2011/12 (-1.6%), which accounts for some of the one-year decline in total incurred, but more of that decline was due to a reduction in claim severity, as incurred costs per claim fell 4.2% to $8,859. From the longer-term perspective, there were 2,228 fewer first report claims last year than in the FY 2005/06 first report, so all of the $181 million increase in public self-insured total incurred losses since the post-reform low have been due to increased claim severity, as average first report incurred medical losses since FY 05/06 low are up 32.4%, while average incurred indemnity losses are up 11.9%.

OSIP also compiles private self-insured claims data, which is reported on a calendar year basis rather than on a fiscal year basis, so the private self-insured data, which was just posted a few weeks ago, now lags the private self-insured data by 6 months. Updated data from the private self-insurers must be submitted to the state by March, so the next report on their experience should be released by mid-2014. In the meantime, CWCI has issued Bulletins that include tables and analyses on the most recent public and private self-insurer paid and incurred losses, with results noted for the most recent decade. Institute members and subscribers may access the bulletin by logging in at www.cwci.org. OSIP’s annual summaries for private and public self-insured employers from the past dozen years are posted online at http://www.dir.ca.gov/SIP/StatewideTotals.html