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CWCI: California WC Public Self-Insured Claim Volume, Paid & Incurred Losses Soared in FY 2021/22

Oakland, CA -- California’s public self-insured workforce increased less than 1% in the 12 months ending June 30, but the total number of public self-insured work injuries and illness claims reported to the state jumped 35%, as the medical-only claim count rose 29.9% while the number of indemnity claims soared by 38.1%.  A CWCI analysis of data from the state’s Office of Self-Insurance Plans (OSIP) shows that with claim volume up steeply, total workers' compensation paid losses for cities, counties and other public agencies in California increased by 31.5% to a record $585 million in fiscal year (FY) 2021/22, while total incurred losses (paid plus reserves) rose 19.3% to nearly $1.68 billion.     

OSIP's summary of the FY 2021/22 public self-insured data, posted this week, provides an initial snapshot of the volume of claims, total loss payments and total incurred losses for the 12 months ending June 30, 2022.  The state compiles the data from workers' compensation reports submitted by hundreds of public self-insured entities, including cities and counties, local fire, school, transit, utility and special districts, and joint powers authorities.  The latest summary shows that in FY 2021/22 these employers provided workers' compensation coverage to just over 2 million California public workers whose wages and salaries totaled more than $145 billion.

Reviewing OSIP’s initial report data for the past two years, CWCI found that after declining 4.4% in FY 2020/21, the number of public self-insured employees in the state increased 0.9 percent in FY 2021/22, but the number of reported work injury and illness claims among these workers jumped from 107,161 to 144,676 cases – a 35% increase.  With the huge surge in claims – many of which were likely COVID-19 claims according to both CWCI data and the state’s survey of occupational injuries and illnesses – public self-insureds' total claim payments at the first report increased by $140 million to $585 million, up 31.5% from the comparable figure for FY 2020/21.  That was the eighth consecutive increase in total public self-insured paid losses, but in this case it was fueled by the huge jump in claim volume and not an increase in the average amount paid per claim, as an influx of relatively low-cost claims drove first report average paid losses down from $4,152 in FY 2020/21 to $4,043 in FY 2021/22. 

A closer look at the first report payment data on public self-insured indemnity claims shows the average indemnity paid per FY 2021/22 lost-time claim was $4,165, which was down from $4,256 the prior year, but the impact of this reduction on the total amount paid was more than offset by the addition of 25,433 indemnity claims.  With the surge in lost-time cases, indemnity claims’ share of the public self-insured claims increased from 62.3% to 63.7%, while less expensive medical-only claims decreased from 37.7% to 36.3%.  Calculating the public self-insured claim frequency rate to control for changes in the work force, CWCI noted that overall claim frequency increased from 5.3 claims per 100 employees (2.0 medical only + 3.3 indemnity) in FY 2020/21 to 7.2 claims per 100 employees (3.3 medical only + 4.6 indemnity) in FY 2021/22.   

The incurred loss data (paid losses + reserves for future payments) followed the same pattern as the paid loss data.  Comparing first report results from the last two years, CWCI found that public self-insureds’ total incurred losses increased by $271.7 million (19.3%) from $1.41 billion ($733.8 million indemnity + $673.8 million medical) in FY 2020/21 to nearly $1.68 billion ($869.9 million indemnity + $809.5 million medical) in FY 2021/22.  With the addition of what appears to have been several thousand relatively low-cost COVID lost-time claims -- the average incurred indemnity per indemnity claim at first report fell 14.2% to $9,987, but with 25,433 more indemnity claims in FY 2021/22 than in FY 2020/2021, public self-insured total incurred losses increased by $271.7 million (+19.3%) compared to a year earlier.   

In addition to the public self-insured data, OSIP also compiles private self-insured claims data, but it is reported on a calendar year basis, so updated figures from California's private self-insurers will be released this summer.  OSIP summaries for private and public self-insured employers are posted here.