The Workers’ Compensation Insurance Rating Bureau of California (WCIRBC) released its “2019 State of the System” report, which presents facts and statistics on workers’ compensation costs, rates, and claims in California. Among other findings, the report revealed that the state has some of the highest expenses for employers in the United States. If you’ve viewed the 2019 State of the System report, you may be wondering how these metrics affect you as a worker, if at all.

The Facts

In California, employers pay more to carry workers’ compensation insurance. At a rate of $2.87 per $100 of payroll, the rates in California are well above the national average of $1.70. The rates have decreased so California is no longer the highest, but it is one of the highest.

The 2019 State of the System revealed potential reasons for the high rates, which include:

• Higher frictional costs
• Medical treatment that lasts longer
• More permanent disability cases

How Workers’ Compensation Insurance Costs Impact Employees

People generally associate high costs with a negative impact, but in California’s workers’ compensation system, this isn’t necessarily true. The relatively high cost of workers’ compensation insurance in California means employers are paying more per employee for coverage when compared to employers in other states. But this doesn’t mean costs are being cut by reducing benefits for workers.

California reformed the state workers’ compensation system in 2012, with initiatives such as anew Independent Medical Review process and permanent disability benefit calculation adjustments.

Since enacting the reforms to the California workers’ compensation system, changes include:

• The state has seen a 27% increase in permanent disability benefits.
• Pharmaceutical costs in relation to workers’ compensation claims have decreased by 70%, resulting in a total medical cost savings amount of $2.4 billion.
• Over 350 medical providers have been indicted on charges of fraudulent activity.

Workers’ compensation insurance rates rely, in part, on the safety of a company. Think of it in the terms of car insurance: If by evaluating your driving history or the accident rate where you live your insurance company feels you have a high likelihood of being involved in a collision, you’ll pay higher rates. The same is true of workers’ compensation insurance — businesses that present a higher probability of being the site of a work injury will pay higher rates. The higher rates could serve as motivation to implement more robust safety measures, reducing the likelihood of on-the-job accidents, reducing insurance rates, and protecting employees.