Annual reports regarding the California Workers’ Compensation Program’s losses and expenses can help the state see where the greatest payments occur in the system. These reports keep track of yearly program spending and compare data across different financial categories to see where the state could make improvements. The 2016 Report by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) shows fascinating statistics that could inform employers and workers’ comp insurers in the state in the next year.
Key Findings in the June 28, 2017 Report
The WCIRB report collected data from insured employer experiences. It also took into account payments the California Insurance Guarantee Association (CIGA) made when calculating statewide loss payments. Taking a look at the latest report can highlight a few trends in insurance company losses and claim costs, such as:
- The program spent a total of $4.8 billion on medical services. This expense accounted for 57% of total loss payments for 2016. This amount is a slight drop from 2015, which displayed $4.9 billion (59%) in analogous medical services.
- The greatest medical service expense in 2016 was “payments made directly to injured workers,” with $1.3 billion (28%), followed by “physician services” at $1.2 billion (26%). Other top expenses include hospital costs (12%), medical-legal evaluations (7%), and pharmaceuticals (6%).
- The average cost of a single medical-legal evaluation was $1,663, while psychiatric evaluations were more expensive – they averaged $3,420 each. Orthopedic evaluations were the most common type of medical-legal evaluation, accounting for about 54% of the total cost.
- Indemnity benefits cost almost $3.6 billion, or 43% of total loss payments. This loss amount includes an estimate of payments CIGA made for indemnity benefits. Indemnity benefit amounts increased by 2% from 2015, which saw $3.5 billion (41%) total.
- The greatest indemnity cost was for temporary disability benefits, at $1,783,620 in thousands (49.6%). Permanent partial disability accounted for $1,470,126 in thousands, or 40.9%. Other indemnity costs were permanent total disability (3.4%), life pensions (2.5%), vocational rehabilitation (1.8%), death (1.7%), and funeral expenses (0.1%).
- There were 9,796 workers’ compensation claims for permanent disability for back injuries, 8,208 claims for slip and falls, 3,632 for repetitive motion injuries, 680 for psychiatric and mental stress injuries, and 5,609 for other cumulative injuries.
- The average cost for a back injury permanent disability claim was $51,882 total – $28,084 for medical and $23,798 for indemnity. The average cost for a slip and fall was higher, at $72,843 total ($44,163 medical, $28,680 indemnity).
The data includes detailed information from the 2016 year, with limited information on 2017. The report suggests that the percentage of earned premiums for insurers has dropped since 2015. In 2015, insurers saw 62% losses and 36% premiums for a total of 98% in earned premium. In 2015, these totals were 60% in losses and 34% in expenses for a total of 94%. Insurers lost the most on “strain by lifting” as the cause of injury, with $448,236,847 (10.5%) in total incurred losses.
Workers’ compensation data can help insurers establish premium costs and employers enhance the safety of workers. Being proactive about using the data can benefit all parties involved.