Report: California Public Self-Insured Workers’ Comp Indemnity Claim Cost up

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An analysis shows that in the midst of the pandemic, the total number of job injury claims reported by California public self-insured employers edged down slightly last year, but a growing number of lost-time claims and rising claim severity fueled by higher indemnity costs drove up total workers’ compensation paid and incurred losses for cities, counties and other public agencies.

That’s according to a California Workers’ Compensation Institute, which on Tuesday issued an analysis of data from the state’s Office of Self-Insurance Plans.

OSIP’s summary of public self-insured data for fiscal year 2020/21 provides an initial glimpse at the volume of claims, total loss payments and total incurred for the 12 months ending June 30, 2021.

The latest summary shows that in FY 2020/21 these employers provided workers’ comp coverage to nearly 2 million California public workers whose wages and salaries totaled more than $139 billion, according to the CWCI.

CWCI’s review found that the number of employees covered by public self-insured employers last year declined 4.4% from the total noted in the FY 2019/20 initial report, though the total number of reported claims fell less than 1% to 107,161 cases.

Despite having fewer workers and slightly fewer claims, total claim payments at the first report rose by more than $30 million to $445 million, 7.3% more than the comparable figure for FY 2019/20, and 41.6% more than the $314.3 million noted in the first report for FY 2013/14, which was the low point for the past decade and the first year following enactment of SB 863, the 2012 workers’ comp reform bill signed by former Gov. Jerry Brown, according to the analysis.

While overall public self-insured claim volume was down compared with a year earlier, CWCI noted that decline was completely due to a 19.7% drop in medical-only claims, which are relatively inexpensive, while the number of more costly lost-time claims rose by 15.5%.

The average indemnity paid per FY 2020/21 lost-time claim at the first report was $4,256, so the addition of the 8,967 lost-time cases was the key factor fueling the increase in public self-insured payments last year, according to CWCI.

CWCI says the recent increase in the number of indemnity claims in the public sector last year is likely due, at least in part, to the addition of COVID-19 claims to the claim mix, because the public self-insured work force includes numerous essential workers like police, firefighters, prison guards, and state hospital workers who have a presumption of compensability if they contract the virus, and who were particularly hard hit by COVID last year.