California’s State Fund Declares $50 Million in Dividends for Policyholders

California’s State Compensation Insurance Fund recently announced plans to disburse a $50 million dividend to qualifying policyholders in the form of a premium credit amounting to roughly 5.2 percent of estimated annual premium for the 2011 policy year.

The renewal credit will be based on 2011 estimated annual premiums and will be applied during the 2012 policy year. The credit is available to 2011 policyholders who: Paid their premiums on time and kept their policy in good standing during the year; renew their policy with State Fund in 2012 and continue to pay premiums timely and accurately; and finalize their audit bill for 2011 within six months of expiration.

The plan was approved Nov. 18 in San Francisco by State Fund’s board of directors at its last 2011 meeting. The board recommended dividends this year after confirming that State Fund has adequate surplus, and is making progress on its expense management and underwriting discipline.

“State Fund’s role in the California workers’ compensation market is to offer fair prices to all California employers,” Tom Rowe, State Fund CEO and president, said in a statement. “We are a company that has been in the midst of dramatic transformation. We have developed and are implementing a strategy that overhauls every aspect of how we do business. This dividend is a down payment on our commitment to help California employers manage the cost of their workers’ compensation insurance.”

Last week State Fund announced a zero-net increase in its most recent rate filing and increased discounts for qualifying members of its group insurance program with the California Farm Bureau Federation.

State Fund last declared a dividend in 2001, which was in excess of $92 million.

Since its inception in 1914, State Fund has paid more than $4.9 billion in dividends to policyholders.