Many approaches to Workers Compensation insurance

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 and administered.

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 insurance.

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 the ever increasing costs of medical care.

Related Pages:

State Fund
Introduction to Workers Comp
Approaches to California Workers Compensation

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