California again ranked most expensive state for workers' compensation

By CMTA Staff

Capitol Update, Oct. 9, 2014

As San Francisco Giant fans celebrate their return to the National League Championship Series (apologies to Los Angeles Dodger fans), shouts of “We’re #1!” reverberate across Northern California. However, another top ranking for California is prompting cries of a much less pleasant kind.

After a near decade long respite from the title of the most expensive state for workers’ compensation premiums, California unfortunately reclaimed the top spot in the latest iteration of the Premium Rate Ranking Study published by the State of Oregon Department of Consumer and Business (ODCB) Services (summary here). The ODCB report has consistently ranked California as one of the most expensive states in the nation since 1994.

The most significant drop in California’s ranking came in 2008 following the enactment of 2004 reforms that brought costs under better control and lowered average employer premiums by 66 percent. However, since that time premium rates have risen more than 40 percent resulting from a combination of increasing injury claim rates, rising average costs per claim, and erosion of savings through court rulings and new abuses by vendors in the system.

This top ranking comes in the face of recently enacted SB 863 (2012, Kevin de León, D-Los Angeles) reforms that provided new tools intended to reduce ‘friction’ in the system and generate savings to fund increased injured worker benefits and employer premium reductions. To date those savings have been eclipsed by the benefit increases and it is unclear if the benefit to California employers will ever be realized.

One thing does remain clear, without further action California employers will continue to pay workers’ compensation premiums well in excess of every other state in the nation and, in particular, two, three or four times the rates paid by employers in Nevada, Oregon and Arizona, respectively. 

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