Report Examines 10-Year California Workers Comp Payment Trends

Average paid losses on California workers’ compensation lost-time claims fell immediately after legislative reforms of SB 863 took effect a decade ago, but then gradually increased up until the pandemic hit, according to a new study.

The California Workers’ Compensation Institute shows the increase puts average paid losses on claims at all valuation points within 60 months of injury above their post-reform lows with only the most developed data on older claims — 72-month data on accident year 2016 claims still showing declines in loss payments in the wake of the sweeping 2012 reforms.

Using data from CWCI’s Claims Monitoring Application on nearly 570,000 indemnity claims for injuries that occurred during the 10-year span ending in December 2022, the study tracks average paid losses at six, 12, 24, 36, 48, 60 and 72 months post injury. It breaks out the results by accident year to identify growth trends.

In addition to average total losses, the study notes the average medical and indemnity payments at each level of development and compares the loss payments for claims from five industry sectors and from different regions of the state.

According to the CWCI study, average total paid losses within the first year of injury fell immediately after the 2012 reforms took effect but bottomed out in AY 2014 and started to trend up in AY 2015, continuing to increase through AY 2020. Average 24-month loss payments bottomed out in AY 2016, then trended up through AY 2019, the latest year for which 24-month data are available.

For the first time in seven years, the six- and 12-month average paid losses fell slightly in AY 2021 (the second year of the pandemic) while the six-month payments on AY 2022 claims edged up slightly, so average total losses in the initial months after injury have changed little since the pandemic began.