1 / 21

THE EFFECTS OF MAJOR REFORMS ON WORKERS’ COMPENSATION RATES IN CALIFORNIA

Explore the effects of major reforms on workers' compensation rates in California from 1995 to 2005. Discover the impact on claims costs, insurance rates, market competition, and more in this insightful study.

upton
Download Presentation

THE EFFECTS OF MAJOR REFORMS ON WORKERS’ COMPENSATION RATES IN CALIFORNIA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. THE EFFECTS OF MAJOR REFORMSONWORKERS’ COMPENSATION RATESIN CALIFORNIA DWC Educational Conference March 2 and March 7th, 2006 Gregory Trout, MPA Bickmore Risk Services Los Angeles & Oakland, California

  2. Conditions Leading to Reforms • Open Rating: 1995 • Claims Cost Increases • Premium Increases • Insolvencies

  3. California Workers' Compensation - Indicated Average Rates 7.00 6.00 5.00 4.00 Average Rate 3.00 2.00 1.00 0.00 Jan-95 May-95 Jan-96 May-96 Jan-97 May-97 Jan-98 May-98 Jan-99 May-99 Jan-00 May-00 Jan-01 May-01 Jan-02 May-02 Jan-03 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 WCIRB Estimated Pure Premium Charged Premium Rate Conditions Leading to Reforms

  4. BRS Study of Reforms • Authorized by SB 899 • Initiated by DWC • No Cost to Taxpayers (insurance industry assessment) • Scope: Impact of Reforms on Claims Costs • Charged Premiums • Insurance Company Surplus • Marketplace/Competition • WCIRB/CDI Estimates

  5. Scope of Study Reforms Focused on: • AB 749 (2002) • AB227/SB228 (2003) • SB 899 (2004)

  6. BRS Study of Reforms • Background Leading to Workers’ Compensation Reforms • Scope and Approach • Claims Savings Generated by Reforms • Effect of Reforms on Insurance Rates • Effects of the Reforms on Insurance Industry Surplus and Solvency • Insurance Markets and Competition • Adequacy and Accuracy of Workers’ Compensation Insurance Bureau and California Department of Insurance Rates • Evaluation of Reforms in Other States • Evaluation of Regulatory Structure • Areas of Further Research

  7. Limitations of Study • Fairness of Benefit Levels and Medical Fees • Quality of and Access to Medical Care • Effects on Self-Insurers • Long Term Effects of Reforms

  8. Retrospective Impact of Reforms • Overall Savings

  9. Exhibit V.3. Estimated Ultimate Losses Less Reported Losses at Successive December 31 Evaluations • (After Reflecting the Estimated Impact of AB 227, SB 228, & SB 899 on Unpaid Losses) As of 9/30/2005 $14 $12.9 $12 $11.4 $11.2 $9.8 $10 $7.8 $8 In Billions $6.3 $5.9 $6 $4.4 $4 $3.6 $2.3 $2 $1.6 $0.5 $- 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Evaluation Year Source: WCIRB Quarterly Report at September 30, 2005 Retrospective Impact of Reforms • Historical Evaluations

  10. Prospective Impact of Reforms • Claims Costs

  11. Prospective Impact of Reforms • Claims Costs: Dollars

  12. Prospective Impact of Reforms • Claims Costs: Percent

  13. Prospective Impact of Reforms • Claims Costs by Major Component

  14. Prospective Impact of Reforms • Insurance Company Rates

  15. Prospective Impact of Reforms • Insurance Industry Return to Profit

  16. Exhibit VI.6. SCIF Market Share, 1998 – 2004 (Percent of Written Premium) 70% 58% 53% 60% 53% 51% 50% 51% 47% 50% 43% 41% 36% 40% Market Share 33% 28% 30% 22% 22% 20% 10% 0% 1998 1999 2000 2001 2002 2003 2004 2005 Year Adjusted Unadjusted Note: Unadjusted percentages are as reported to CDI. Adjusted reflect adjustments by BRS to amount reported by SCIF due to difference in recognition of written premium. Prospective Impact of Reforms • Insurance Company Market Share

  17. California vs. Other States • Loss Rate Comparison

  18. Uncertainties Remain ? • Future and Retroactive Cost Savings will be impacted by: • Changes due to Legal Decisions • Legislative Changes • Regulatory Changes • Changes to System through Voter Initiatives ? ?

  19. Areas of Further Research • SCIF’s Role • CIGA Funding • Review of Regulatory Oversight • Cost Savings of Reforms to Public and Private Self-Insurers • Need for claims data from Self-Insurers • MPN’s • Annual Monitoring of the Effects of Reforms and Subsequent Changes

  20. Next Year’s DWC Session Will it be: • “The Effects of Proposition 142, 143, and 144 on the Workers’ Compensation System in California” • “The Effects of the Revised P.D. Schedule Adopted July 1, 2006 & other changes to Previous Reforms”, or • “The Savings Continues From the Reforms of 2002-2004” ???

  21. Study Availability • The Study can be downloaded on the internet from: • BRSrisk.com • dir.ca.gov/DWC • Or by requesting a CD from BRS or DWC

More Related