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President's Message to Our California Workers' Compensation Community


The California workers’ compensation marketplace today remains generally healthy for insurers, employers and injured workers. The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) continues to chronicle the overwhelmingly positive outcomes from the latest comprehensive system reforms of 2012 and forward. These reforms fueled, in large measure, an environment of stable claims frequency and loss severity (in both indemnity and medical) and a broadly competitive market, with increased benefits for injured workers.

For injured workers, these reforms have provided $800 million in increased benefits for permanent disability.

For employers, the stable loss cost environment, coupled with a growing California economy spurred by higher wages and lower unemployment, has contributed to eight consecutive advisory pure premium rate reductions approved by the Insurance Commissioner from January 2015 through January 2019 – in aggregate totaling more than a 40 percent overall reduction.

For insurers, the WCIRB is projecting through 2018 a sixth consecutive year of California workers’ compensation industry accident year combined loss and expense ratios below 100 percent – the longest stretch of below 100 combined ratios over the past 40 years.

During this period of significant change and resulting stability, the WCIRB has continued to be the trusted, objective provider of actuarially based advisory pure premiums, industry research and reform evaluations that inform and advise all stakeholders about the state of the California workers’ compensation system – a system to which we have been integral for more than 100 years.

Despite its recent stability, there are challenges and concerns within the California system. Among them, which are spotlighted in the WCIRB’s interactive 2018 State of the System report, are the following “Big Four” areas:

Costs for claims handling and dispute resolution (i.e., frictional costs) are the highest across all states’ workers’ compensation systems, are greater today than the annual cost of paid indemnity benefits to injured workers and, in total, are more than double the cost to provide a dollar of benefits compared with the median state workers’ compensation system in the United States.
The percent of claims involving cumulative trauma has significantly escalated in the past decade, accounting for more than 15 percent of indemnity claims, and is highly concentrated in Southern California – with the costs of cumulative trauma claims (both losses and frictional costs) being a uniquely California phenomenon when compared with other states.
Regional differences across California when examining claims frequency, cumulative trauma, permanent disability and frictional costs are key to stakeholder understanding for sellers (insurers) and buyers (employers). Despite a single statewide workers’ compensation system, cost drivers vary widely in California – geography matters (see the 2018 WCIRB Geo Study on
Duration of medical payments in California is very prolonged when compared with other states’ workers’ compensation systems, causing future medical loss costs in California to be particularly susceptible to changes in medical inflation patterns.

Against the backdrop of recent California stability, historic volatility and the previously noted Big Four concerns is the ongoing change in the nature of the workers’ compensation business as reflected in more data-driven models and predictive analytics. The WCIRB has strategically positioned itself in the forefront of new data, new thinking, new research and new insights to look forward with greater clarity about the workers’ compensation system into the future.

We remain committed to our core responsibilities as California’s workers’ compensation licensed rating organization and designated statistical agent, and in order to increase the value we provide to you, we have transformed our organization from a classic data collection bureau to a modern data analytics organization. The year 2018 was an evolutionary pivot for us as we began to embark on a journey that no rating bureau has taken on: to become a data science organization, striving to uncover and illuminate new forward-looking insights into the workers’ compensation system beyond reporting about data and trends from the past. We are excited and driven to lead the WCIRB during this next chapter of growth and innovation in the largest and most complex workers’ compensation market in the country.

2018 Key Achievements

The year 2018 can be summed up as ongoing excellent management of our core responsibilities, pursuit of transformational initiatives to enhance research and industry perspectives as well as continuous improvement of business operations, with a focus on expanded value we provide to stakeholders.

Core Responsibilities

Regarding our core responsibilities around advisory pure premiums, classifications, experience rating and the Insurance Commissioner’s regulations, the WCIRB team, along with our Classification and Rating Committee and Actuarial Committee under the direction of the WCIRB Governing Committee, completed two pure premium rate filings and submitted a regulatory filing coupled with significant stakeholder outreach on a multiyear study of the private schools classifications.

Transformational and Business Initiatives

Two of our transformational initiatives that are particularly relevant to deeper insights into workers’ compensation cost drivers and the opportunities they present to sharpen our vision about the future are in the areas of behavioral science and industry research. In addition, the ongoing stakeholder collaborative evolution of our Comprehensive Risk Summary® (CRS) product is an excellent example of a WCIRB business initiative aimed at enabling a more efficient insurance transaction for employers and insurers.



Behavioral Science

One of the most promising developments to date that has come from our active Research and Development focus is the budding research partnership we have with University of California, Berkeley on behavioral science.

We have codeveloped a pilot study centered on medical provider behavior related to anomalous patterns of relatively high cost yet low relative patient value treatments. Whether this identification could produce a new set of leading cost indicators in the workers’ compensation system is an avenue to be explored. We look to present some early findings on this melding of behavioral and actuarial science this summer.



Industry Research

The WCIRB’s Actuarial Research and Medical Analytics teams delivered several important research reports in 2018, with valuable insights into the costs and cost drivers that underpin the California workers’ compensation system. Our WCIRB research is widely available to all stakeholders and the general public at

The following reports were developed by the teams this year, and with each report we included a live webinar forum for interested audiences to interact directly with the study authors:

Impact of Medical Fraud Enforcement on California Workers’ Compensation
- Study of Chronic Opioid Use and Weaning in California Workers’ Compensation
- The World of Cumulative Trauma Claims
- 2018 State of the System
- Workers' Compensation Risk Assessment California Terrorism (collaboration with RMS)



Comprehensive Risk Summary

In 2014, we launched our vision of an industry-standard loss run using the trusted source data from the WCIRB that provides detailed policy-related exposure and claims information available for every insured risk in California. In 2018, we incorporated electronic authentication for a policyholder’s letter of authorization to the WCIRB for the release of their information to an agent, broker and/or insurer, in either data download or report form. As CRS has evolved, the volume of requests has grown substantially, with over 4,500 fulfillments in the last year.






Strategic Direction

The WCIRB’s strategic direction remains grounded on continuing to advance the health of California’s workers’ compensation system through ongoing, actuarially based advisory pure premium ratemaking, administration of the Insurance Commissioner’s insurance regulations, new medical and behavioral research, impartial insight into the drivers of occupational loss and loss-related costs as well as broad-based outreach and education for all stakeholders. In addition, we will facilitate greater enablement of efficiencies in the insurance transaction process by engaging with employers, agents and brokers and insurance companies to leverage new technologies with WCIRB capabilities and resources.

Central to our strategic progress, as was true in our past five years of transformation as a company, is the courage, competency, fit and drive in our leaders who run the business. We set high expectations, and we invest in our leaders’ development to maximize their potential and to empower their teams. Two vital foundational investments over the next several years are the following initiatives.



Customer Experience

A key dimension on the WCIRB’s strategic roadmap during the next five years is our evolution from being customer-focused to becoming a full customer-enabled organization. In 2018, we hired a managing director of Customer Experience to lead us forward by infusing more modern customer experience thinking and introduce new toolsets for increased customer connection and assessment of customer value across the company.

Customer Experience during the next three years will shape the WCIRB’s direction through a focus on answering and delivering on the following questions:

  • Where do we invest to maximize the greatest customer value-to-effort result?
  • How do our customers want to connect with us?
  • What organizational and process changes produce stronger customer alignment?
  • Which culture and reward systems drive successful colleague-to-customer enablement?



Employee Engagement

The diversity of thought and talent reflected in the WCIRB’s workforce is our most important asset, today and into the future. Our people – with their commitment, passion, creativity and collaborative spirit – are reflected brightly in every WCIRB touchpoint, product and service. 

We have just conducted our first-ever robust employee engagement survey, utilizing the resources and toolsets of an independent firm, to guide us in delving deeper into engagement beyond traditional employee satisfaction methods. With one of the strategic goals of our five-year plan hinged to our colleagues thriving and experimenting within a trusted space, we seek to learn new ways of connecting with our colleagues to increase their level of full engagement with the company.




This year, 2019, is a brave new world in some ways, with new administrations at the California Department of Insurance and the Department of Industrial Relations to get to know and engage with in the work of the WCIRB. In addition, the achievement of our annual business plan will once again challenge us all at the WCIRB to further step up, reach out, collaborate more, engage in new thinking and continue our ability to be agile and driven to excellence. As with 2018, it will be another exciting year ahead. We will continue to set the bar high, and as CEO I am confident that we will reach it more often than not.

Bill Mudge
President and CEO, WCIRB California