Don Dressler Consulting

The Workers’ Compensation Insurance Rating Bureau this past week released its initial review of the December 2005 experience of California’s workers’ compensation insurers.

Insurers made a lot of profit in accident years 2005, as they did in 2004, with loss ratios in both years of 33%
When viewed over a longer term, however, the average accident year “combined ratio” adding losses and operating expenses has been 128%, reflecting significant losses from 1997 through 2001.
That said, right now the workers’ compensation market is extremely competitive- good news for employers.

Ultimate Total Loss Per Indemnity

Alarm bells should be ringing, however, because the cost of indemnity claims went up in 2005 by $4,115 or over 10%, just when they should have been going down. After all, the 2004 California reforms gave employers and their insurers:

more medical control over claims through Medical Networks
medical treatment guidelines
objective measures to evaluate permanent disability
reduced permanent disability awards if injured workers are offered return to work or modified duty

These higher costs suggests that many employers are not managing their claims as aggressively as they could.

Percentage Change in Indemnity Claim Frequency

Employers have been providing ever safer work sites, and as a result, the frequency of lost time injuries (indemnity claims, has gone down in 12 of the past 14 years, by over 17% in the past 2 years alone.

If you have questions about Medical Provider Networks, what notices you are required to provide your employees, or how to lower your workers’ compensation costs, call Don Dressler at 949-533-3742 or e-mail: DonDressler1@hotmail.com.