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WCIRB Reports on Frictional Costs in CA Workers’ Comp System

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its Friction in the California Compensation System report, which details the primary drivers of California frictional costs, the impact of high frictional cost claims and recent trends in frictional costs.

The full report is available in the Research section of the WCIRB website and at the following link:

Highlights of the report include:

  • Frictional costs in the California workers’ compensation system are much higher than other systems across multiple categories, despite some recent decreases in frictional costs in California.
  • California’s higher frictional costs are driven by a higher volume of permanent disability claims, higher proportions of claims involving cumulative trauma injury, longer average claim duration and regional differences within the state.
  • California’s high allocated loss adjustment expense (ALAE) costs are driven more by the frequency of claims involving significant ALAE costs, which is highly impacted by where the claim occurs and whether it involves a cumulative trauma injury.
  • Claims with higher ALAE costs are associated with higher indemnity and medical costs even after controlling for similar other claim characteristics.

WCIRB Research Forum Webinar

The WCIRB will host a free webinar to discuss the Friction in the California Compensation System report. Click on the registration link below to sign up.

Frictional Costs in the California Workers' Compensation System
Wednesday, December 8, 2021, 10:00 AM – 11:00 AM PT
Actuaries at the WCIRB will discuss the areas that drive California frictional costs and explain why our costs are so much higher than in other states. We'll also look at what factors are driving recent trends in frictional costs in California.

For those unable to attend the live webinar, a recording will be posted in the Research section of the WCIRB website following the event.

November 30, 2021