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A Checkup for the Work Comp System and Other Annual Conference Insights

UPDATE (June 24, 2014) - Videos for conference speakers and panel discussion now available! See links below.

The health of the workers’ compensation system in California and statewide economic trends likely to impact the system in the future were among the topics discussed at today’s Annual WCIRB Workers’ Compensation Conference in San Francisco. The Conference is an opportunity for WCIRB members and other industry stakeholders to discuss issues of common concern and to hear from leading voices in the California workers’ compensation system.

A Checkup for the Workers’ Compensation System

WCIRB President and CEO Bill Mudge opened the Conference with a “health checkup” on the State’s 101 year old workers’ compensation system from the perspective of injured workers, employers and insurers. Based on Mr. Mudge’s observations, “vital signs” for the California system are mixed.

  • For injured workers, fewer injuries and timely access to care and benefits are balanced by concerns over the level of wage replacement, the problems associated with high rates of long-term opioid use and delays getting back to work.
  • For employers, fewer injuries, numerous insurance choices and a charged rate level that remains approximately 50% below what it was a decade ago are balanced against a litigious, costly and complex workers’ compensation system.
  • For insurers, the size of the workers’ compensation market, pricing flexibility and competition are balanced against volatile insurer results, unpredictable outcomes, and a complex benefit delivery system.

To view Mr. Mudge’s presentation, click the links below.

Presentation: The California Workers’ Compensation System: A WCIRB Comparative Health Checkup

Video:  (New)
The California Workers’ Compensation System: A WCIRB Comparative Health Checkup (22 min)

Regional Differences Have an Impact

Economist Jeff Michael from the Business Forecasting Center at the University of the Pacific shared his research into regional variances in California’s economic recovery and highlighted a number of trends that are likely to impact the workers’ compensation system in the future.

Among his observations:
  • Northern California regions of San Francisco and San Jose will continue to lead California over the next year, but are starting to push against the limits of rapid growth
  • Coastal Southern California is showing signs of improvement
  • Inland areas are growing again, but suffer from sluggish construction and stagnant wages
  • Regional inequalities have been growing for three decades and show no signs of reversing

Insurer Rates, Severity Trends Moderating—SB 863 Results Mixed

WCIRB EVP, COO and Chief Actuary Dave Bellusci provided a WCIRB perspective on the workers’ compensation system and connected Dr. Michael’s statewide economic data with the WCIRB’s statewide insurer experience data.

Among the highlights of his presentation are:

  • California written premium continues to grow at a double-digit rate due to increases in insurer rates as well as economic expansion. California premiums make up approximately one-quarter of the national market.
  • While average insurer rates continue to increase, the rate of growth show signs of moderating in early 2014.
  • Unlike in most other states, California indemnity claim frequency continues to grow, predominantly driven by results in the Los Angeles area.
  • Claim severity trends remain moderate. However, pharmaceutical costs are increasing sharply.
  • Despite many SB 863 reforms taking effect in 2013, loss adjustment costs per claim grew.
  • The statewide accident year combined ratio decreased significantly in 2013, but remains well above the national average.
  • Preliminary SB 863 results are mixed with early indications of cost savings for some components meeting or exceeding expectations, while others create concerns as to whether projected savings will emerge.

To view Mr. Bellusci's presentation, click the links below.

Presentation: The California Workers’ Compensation System: A WCIRB Perspective

Video:  (New) 
The California Workers’ Compensation System: A WCIRB Perspective (1 hr, 7 min)

SB 863 – A Conversation with the Front Lines  Panel Discussion

In addition to the featured speakers, the WCIRB reconvened its panel of Senate Bill No. 863 (SB 863) experts representing physicians, employers, claims handling experts, independent medical review providers, regulators, applicant and defense attorneys, and the Worker’s Compensation Appeals Board. Panelists shared their observations regarding the implementation of SB 863 based on an additional year of experience and engaged in a lively, interactive discussion with audience members.

Panelists included:

  • Angela Mudge, Angela Livingston Collaborations, Inc.
  • Karyn Smithson-Hughes, Nestlé USA
  • Dr. Lavanya Kailar, Kaiser Permanente San Jose Medical Center
  • Lou Shields, Maximus Federal Services
  • Destie Overpeck, Acting Director, Department of Industrial Relations, Division of Workers’ Compensation
  • Gary Nelson, Gary Nelson Law
  • James A. Rossi, Rossi Law Group
  • The Honorable Michael Cole, Administrative Law Judge, DWC

Video: (New)
 SB 863 – A Conversation with the Front Lines (1 hr, 23 min)


June 12, 2014