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Industry Insights

Castillo: Profits Before People

  • State: California

The Workers' Compensation Insurance Rating Bureau (WCIRB) released its 2019 California Workers' Compensation Losses and Expenses report last week showing continued profits for insurers as combined losses and expenses declined by roughly $100 million.

Michael Castillo

Michael Castillo

Overall, California insurers paid $13.2 billion in combined losses and expenses in 2019, down slightly from $13.3 billion in 2018.

Medical payments and expenses were estimated to be $4.6 billion in 2019, unchanged from 2018. The combined loss and expense ratio was 82% of earned premium, the fifth consecutive year below 100, further increasing insurer profits.

The WCIRB estimates an underwriting profit of $2.9 billion, or 18% of premium, in 2019 compared to $4.1 billion, or 23% of premium, in 2018.

Medical payments made to treat injured workers were down for categories such as hospital services for inpatient and outpatient procedures (which accounted for 31% of provider services), medical supplies and equipment, medical liens and pharmaceuticals. 

Payments made directly to injured workers increased to $1.47 billion, up slightly from $1.44 billion in 2018.

Meanwhile, insurers’ average charged rate per $100 of covered payroll for California workers’ compensation policies fell to $2 in 2019, continuing a trend of decreases since the recent peak of $2.98 in 2014.

What do these numbers tell us?

Insurers are raking in billions, and employers are saving money on premiums while workers are having their medical claims denied and delayed in the name of reducing costs and increasing the bottom line.

What's even more interesting is that the WCIRB continues to target cumulative trauma (CT) claims as a growing concern and major determinant of workers' compensation costs.

But according to this latest report, total reported losses on permanent disability claims associated with "carpal tunnel/repetitive motion," "other cumulative injuries" and "psychiatric and mental stress injuries" (also a form of cumulative trauma) accounted for only a combined total of 13% of losses in 2017.

Estimated costs per claim were also significantly lower for these types of injuries compared with specific slip-and-fall or back injuries.

As long as California’s insurers are more interested in perpetuating the status quo of profits before people, workers are getting screwed and are unable to get the care they need to heal, get back to work and provide for their families.

Michael Castillo is communications director for the California Applicants' Attorneys Association. This opinion is republished, with permission, from the CAAA website.

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