Castillo: Six Cents

Monday, August 26, 2019 | 1

Six cents.

Michael Castillo

Since 1975, workers' compensation charged premiums paid by employers have increased by only 6 cents.

In 1975, employers paid $1.98 per $100 in payroll. In 2019, employers paid $2.04 per $100 in payroll.

That's according to the recent State of California's Workers' Compensation System report released by the Workers' Compensation Insurance Rating Bureau (WCIRB) last month.

The WCIRB report also shows that total medical costs paid per claim have decreased by 23% since 2012; 2018 was the fifth consecutive year of a combined loss and expense ratio of 90% or less; and average returns on net worth have increased significantly in California since 2012, going from 3% in 2013 to 7.9% in 2015, to 8.7% in 2016 and to 9.9% in 2017.

Meanwhile, a new report shows that CEO pay has increased 940% since 1978, while employee wages have only increased 12%. CEOs earn, on average, 248% more than the average worker.

It's a boon for employers and insurers. And who's the scapegoat for increased workers' compensation costs? The WCIRB points the finger at workers in the Los Angeles Basin and San Diego areas making less than $500 per week who resort to filing cumulative trauma claims after years of hard work.

Yet the frictional costs are derived from the insurers' own denial of claims. A Lockton Cos. report issued last year showed that for every 100 denied claims in California, only 18 actually stayed denied. The other 82 denials were reversed. In fact, the 82% of denied-then-paid claims cost an average of $27,419, while claims that weren't denied cost $16,833.

According to the WCIRB's report, almost 75% of CT claims are initially denied.

Rather than blaming low-income workers, perhaps insurers should be re-evaluating their own claims practices.

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