- Press Release
July 21, 2021
CWCI: Private Self-Insured Indemnity Claim Frequency, Paid & Incurred Losses Spiked in 2020
Oakland, CA – Despite the pandemic-driven recession, workers' comp claim frequency among California's private self-insured employers rose in 2020, fueled by a big increase in the incidence of indemnity claims which more than offset a decline in medical-only claim frequency according to a California Workers' Compensation Institute (CWCI) analysis of the initial AY 2020 data compiled by the state Office of Self-Insurance Plans (OSIP).
OSIP's annual summary of private self-insured data, released July 8, provides the first snapshot of California private, self-insured claims experience for cases reported in 2020, including 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 latest summary reflects the experience of private self-insured employers who covered 2.34 million California employees last year (vs. 2.33 million in the 2019 initial report), and who reported a total of 86,503 claims in 2020 – slightly more than the 85,852 claims shown in the 2019 initial report. It is notable that the number of covered employees in the private sector self-insured sector held steady while statewide unemployment soared during the pandemic, though CWCI notes that many large, private self-insured employers fit into the “essential worker” category (e.g., major retail, health care, utilities) where workers were less impacted than the insured work force by furloughs, layoffs, and remote work.
OSIP’s initial report on 2020 private self-insured experience shows 43,779 medical-only claims (down 15.1 percent from 51,545 claims in 2019) and 42,724 indemnity claims (up 24.5 percent from 34,307 in 2019). The 2020 claim count translates to an overall frequency rate of 3.70 claims per 100 private self-insured employees, nearly matching the overall frequency rates from 2018 and 2019, though the breakdown by claim type underscores the major shift in the claim distribution away from less costly medical-only claims and toward more expensive indemnity claims. While medical-only claim frequency per 100 employees fell from 2.21 in 2019 to a 15-year low of 1.87 in 2020, the indemnity claim rate rose from 1.47 to a 15-year high of 1.83.
That shift was also evident in the first report paid and incurred loss data. Paid losses on the 2020 private self-insured claims through the fourth quarter totaled $268.4 million, $15.6 million more than the comparable figure for 2019, as total paid indemnity (primarily temporary disability payments) increased by $25.1 million (22.5 percent) while total paid medical fell by $9.5 million (6.7 percent). Similarly, total incurred losses (paid benefits plus reserves for future payments) increased to $742.4 million, up $48.0 million from the initial incurred amount reported for 2019 claims, as total incurred indemnity at the first report climbed by $40.2 million (6.9 percent) and total incurred medical increased by $7.8 million (1.9 percent). Average paid and incurred losses in the initial report both rose sharply in 2020, climbing to $3,103 and $8,583 respectively, with all of the year-over-year increase in the average paid amount and most of the increase in average incurred due to increased indemnity.
OSIP's summary of private self-insured’s calendar year 2020 data, follows the December 2020 release of public self-insured claims data for fiscal year 2019/2020. 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 Institute's website to view a Bulletin with more details, analysis, and graphics.
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