Many approaches to Workers Compensation
The State of California has a long and diversified
history on the subject of Workers Compensation
insurance. Can you believe that originally the laws
passed in the first half of the 1900's required the
employee to show the Employer's negligence to receive
compensation for a claim sustained at the workplace.
But as time passed a series of laws were passed
protecting the employee's rights and streamlining the
process of claims submission, acknowledgement, and
payment. Workers Compensation is now a state mandated
The implementation of the market approach differs in
many States. Some of them have an entirely private
market with insurance companies competing and managing
the products, like those in Nevada and West Virginia.
This entirely privatized path was successfully designed
to control out of hand costs which were getting absorbed
by the State government.
A small handful of States take the opposite method and
have absorbed the Workers Compensation marketplace
entirely into the government. This approach eliminates
private insurance, competition, and choice.
Finally, about a dozen States or so have implemented a
split market, where the private insurers offer coverage
and compete for business but the State government also
runs a 'State Fund' of Workers Compensation coverage
which insures businesses, competes for with the private
market, and sets a model for coverage and pricing. It
also insures the State Public employees for their
workplace injuries and such. In California we have this
type of model in place. It provides stability to the
arena, offering a backbone to the private sector in the
face of dramatically rising medical costs. The
California State fund is the largest insurer of
employees in California for Workers Compensation
The State Fund of California employs many State
government employees to operate effectively an insurance
company with greater capacities of regulation. The
State Workers Compensation Fund of California assumes
the greater risks a when a private sector insurance
company is not willing to assume.
Is the State Fund the best price bet for your dollar in
a high risk industry sector like construction? The
answer is not always. It is not wise to automatically
assume the California Workers Compensation State Fund is
guaranteed to be the lowest rate price for a high risk
industry. Each company is truly unique and the power of
competition and a dynamic economy make price quote
shopping worthwhile regardless of whether or not you are
in the cupcake business or the hazardous waste sector.
California State Fund pricing rises and falls with the
amount of their claims overhead, and the operations
cost. It does not receive tax payer dollars or
subsidies. The heavy burden of the medical claims of
insuring the bulk of the high risk industries can sway
the rates of the CA State Fund and provide opportunity
for a private sector insurance carrier to possibly offer
a lower premium price in certain cases.
The California State Workers Compensation is a unique
category of insurance, due to the reliance of the
employee base of our workforce to have both a demand for
coverage when it's needed most, and a safety net versus
increasing costs of medical care.
Introduction to Workers Comp
Approaches to California Workers Compensation