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Fewer Claims But Higher Losses for California Workers Comp Private Self-Insureds

Oakland, CA – Private self-insured claim volume in the California workers' compensation system fell 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.

The distribution by claim type shows private self-insured employers reported 48,404 medical-only claims in 2023 (down 7.4% from 52,300 in 2022, the final year of the pandemic), though that was 10.6% above the 43,779 med-only claims noted in 2020, when COVID closures suppressed med-only claim volume as the state’s economy went through 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-insured’s 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.  Given that there were 9,892 fewer private self-insured claims in 2023 than in 2022 -- including 5,996 fewer indemnity claims -- the increases in private self-insureds’ total paid and incurred amounts in 2023 can be ascribed to the growth in the average paid and incurred losses at the first report, as average paid losses per claim climbed 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 at http://www.dir.ca.gov/SIP/StatewideTotals.html.  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.