Fewer Claims, Higher Losses for CA Workers’ Comp Self-Insureds

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October 25, 2024 | Oakland, CA — MedLegalNews.com — Self-insured workers in California saw claim volume in the state’s workers’ compensation system fall 9.5% in 2023, producing the biggest year-to-year decline in private self-insured claim frequency in more than 15 years. But double-digit increases in the average amounts paid and incurred on these claims drove total paid and incurred losses for private self-insured employers sharply higher, according to a California Workers’ Compensation Institute (CWCI) review of initial data from the state Office of Self-Insurance Plans (OSIP).

OSIP’s annual summary of private self-insured data, issued June 27, provides the first look at California private, self-insured claims experience for cases reported in 2023.  It includes the total number of covered employees, medical-only and indemnity claim counts, and total paid and incurred losses on those claims through the end of the year.  The 2023 summary shows the experience of private self-insured employers who covered 2.34 million California employees last year (down from 2.42 million in the 2022 initial report) and who reported 94,386 claims in 2023, down from 104,278 claims in the 2022 initial report.

Private self-insured employers reported 48,404 medical-only claims in 2023—a 7.4% drop from 52,300 in 2022, the pandemic’s final year. However, this count was still 10.6% higher than the 43,779 med-only claims recorded in 2020 when COVID closures temporarily reduced claim volume amid a brief but steep recession.

Meanwhile, private self-insured indemnity claim volume, which spiked during the pandemic (climbing from 34,307 claims in 2019 to 51,978 claims in 2022, likely due to the influx of lost-time claims involving COVID) fell 13.0% to 45,982 claims in 2023. 

The latest claim count works out to an overall frequency rate of 4.03 claims (2.07 med-only and 1.96 indemnity) per 100 private self-insured employees in 2023, down from an overall rate of 4.31 in 2022 (2.16 med-only and 2.15 indemnity), marking the first decline in private self-insured claim frequency since the pre-pandemic year of 2019, and the most significant drop in the 16 years covered by the CWCI review.   

CWCI notes that despite the declines in claim volume and claim frequency, private self-insureds first report total paid and incurred losses were both up in 2023.  Paid losses on 2023 private self-insured claims through the fourth quarter totaled $340.2 million, 9.4% more than the first report total for 2022, as total paid indemnity (primarily temporary disability payments) increased by $10.9 million (6.7%) to $172.8 million, and total paid medical increased by $18.2 million (12.2%) to $167.4 million. 

The latest results also show that first report total incurred losses (paid benefits plus reserves for future payments) on private self-insured claims rose to $864.0 million in 2023, up $52.2 million, or 6.4% from the comparable 2022 figure, as total incurred indemnity at the first report increased by $16.3 million (4.7%) to $361.4 million and total incurred medical increased by $35.9 million (7.7%) to $502.6 million. 

With 9,892 fewer private self-insured claims in 2023 than in 2022—including 5,996 fewer indemnity claims—the rise in total paid and incurred amounts for self-insured workers in 2023 reflects growth in average paid and incurred losses at the first report. Average paid losses per claim increased 20.9% to $3,605, while average incurred losses rose 17.6% to $9,153.

OSIP’s summary of private self-insured’s calendar year 2023 data, follows the December 2023 release of public self-insured claims data for fiscal year 2022/2023.  OSIP private and public self-insured claim summaries from the past 20 years are posted here.  CWCI members and subscribers may log on to the Communications section of the CWCI website www.cwci.org to view a summary Bulletin with more details, analyses, and graphics.

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FAQs: Self-Insured Workers’ Comp in California

Why did self-insured workers’ comp claims decline in 2023?

The drop in self-insured workers’ comp claims reflects fewer COVID-related indemnity cases and a return to pre-pandemic frequency levels.

Why did losses rise even with fewer claims?

Losses climbed because the average paid and incurred costs per self-insured workers’ comp claim increased, particularly in medical and indemnity expenses.

How much did self-insured workers’ comp losses increase?

Paid losses rose 9.4% to $340.2 million, while incurred losses increased 6.4% to $864 million, marking significant cost growth despite fewer claims.

What does this mean for California employers?

Employers relying on self-insured workers’ comp programs may face higher per-claim expenses, signaling the need for close monitoring of medical and indemnity costs.

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