Viewpoint: Insurers Face Added Role in Curbing Workplace Violence With California Law

New legislation aimed at reducing workplace violence in California vastly increases employers’ responsibilities and hands workers’ compensation insurers an unprecedented oversight role that is likely to trigger lawsuits and affect rates and capacity.

The Workplace Violence Prevention Bill SB 553, which comes into effect on July 1, is the first sector-agnostic piece of legislation by a US state aimed at tackling what has become an urgent issue. In other words, any employer and sector of work must respond. It reflects a nationwide push to extend workplace violence prevention measures beyond healthcare and applies to all companies in the state, with only a limited number of exceptions.

The bill mandates written workplace violence prevention plans and sets out requirements for employee training, incident response, and record keeping. Responsibility for implementing these plans must be assigned to specific individuals, and failure to comply from July 1 will trigger a range of fines and potentially multiple penalties per incident.

Workers’ compensation insurers will become the de facto regulator of these plans. For higher risk employers they must produce a written report about employers’ efforts to prevent and reduce injuries within six months of the policy start. As part of this, they are required to evaluate the plan’s various components and recommend any changes needed to make it effective. This is not the type of work that many insurers can do in house: they will need to enlist a licensed California professional engineer, certified safety professional, or a certified industrial hygienist to help them.

The law adds to existing California legislation covering hospitals, and follows years of debate about how to protect employees in the workplace from what has become a significant risk.

Nationwide, the National Safety Council (NSC) found assault was the fifth-leading cause of workplace deaths in 2022. Some 525 American workers lost their lives this way, with 57,610 sustaining injuries.

While attacks on schools gain the most headlines, workplace violence affects many types of businesses. Alongside healthcare, where around a quarter of US states already have workplace violence legislation in place, trouble spots include the service sector, education, transportation and logistics, and manufacturing.

Mass shootings will generally attract attention, but many other incidents fly under the radar or even go unreported altogether. This has created an awareness deficit among employers about the security issues their workers face. (Health care is largely excluded from this bill because California already passed even more stringent rules for that sector in a previous law.)

The assailants in these incidents are often known to their victims and are likely to be current or former employees. That was the case in the incident that propelled California lawmakers into action over the latest bill: the fatal shooting in 2021 of nine employees by a co-worker at the Santa Clara Valley Transportation Authority railyard in San Jose.

Although such attacks may seem to come out of the blue, the NSC points to mood swings, emotional responses to criticism, unexplained absenteeism, depression, rule-breaking, paranoia and excessive use of alcohol or drugs among potential early warning signs in employees.

The California law is the first of its kind in the US and, importantly, defines “workplace violence” broadly, with no actual injury necessary for an employee to be deemed to be on the receiving end. Instead, workplace violence is defined as “any act of violence or threat of violence that occurs in a place of employment, including the threat or use of physical force, with or without firearms or other dangerous weapons, against an employee that results in, or has a high likelihood of resulting in, injury, psychological trauma or stress.”

This wording, in what is already a highly litigious market, opens the doors to a wave of litigation if insureds, insurers, or both, are found to be non-compliant when the inevitable incident occurs after July 1.

Plaintiffs’ attorneys are likely to target general liability policies since workers comp insurance itself was created to be a “no-fault” system that is litigation free, with compensation administered by states and designed to merely put the injured worker in the position they would have been in before the incident.

The prospect of legal action, along with the additional costs for insurers of overseeing companies’ workplace violence prevention efforts, threaten workers comp’s status as the golden child of P/C insurance. Only last year, AM Best declared that the line remains a “profit engine” for the P/C industry as a whole, while the most recent figures from the National Council on Compensation Insurance put the calendar-year combined ratio of 84% in 2022, on net written premiums of $47.5 billion. (It did, however, warn that medical claims severity and indemnity claims severity were rising).

The new legislation is likely to force an increase in workers comp rates and have a knock-on impact on liability lines too. In a worst-case scenario, the additional costs of insurers’ new obligations and the anticipated lawsuits may mean capacity in the workers comp market shrinks as carriers decide it’s just not worth their while.

At the same time, demand for workplace violence cover is likely to increase. The cover augments the physical injury cover provided under workers comp insurance to indemnify against additional expenses incurred in the aftermath of attacks such as third party harm, mental health support, and the cost of crisis management, security and public relations consultants.

The legislation in California is highly significant in its own right. California, the biggest US economy by gross domestic product, accounted for more than 12% of overall US P/C premiums of $862 billion in 2022, according to the Insurance Information Institute.

However, this pioneering legislation is being watched closely by other states, including New York, where similar legislation aimed at protecting retail workers is in the pipeline. Legal intelligence company LexisNexis found that more than 100 bills mentioning “workplace violence” had been introduced between January and November 2023 in 27 states, with a quarter of those measures enacted or adopted.

It’s important to note also that although the deadline for insureds’ compliance with the Workplace Violence Prevention Bill is July 1, that’s only the start of the process since the California Division of Occupational Safety and Health has been charged with devising new standards and regulations by Dec. 1, 2025. That means initial requirements flagged in the legislation may change.

Human resources and compliance departments are now racing against the clock to meet the existing requirements, and keeping a close eye on what will come next. It’s also vital that compliance with the new rules becomes a key priority of workers comp insurers.

Carriers wondering where to start should begin with a thorough assessment of insureds’ exposure and how they are mitigating workplace violence risks. This will put insurers ahead the curve when their insureds’ workplace violence prevention plans land and make their oversight task less arduous if and when similar legislation is rolled out elsewhere.

Carriers need to familiarize themselves with their clients’ existing security equipment and security arrangements. Other factors to consider include the extent to which their clients’ workers interact with the public, where these employees carry out their duties, and with whom. Shift patterns play into the risk profile, as do jobs that include handling cash or serving alcohol to the public.

Many companies are, of course, already doing their best to combat workplace violence. However legacy systems that mitigate or contain attacks are hampering their efforts. These systems were often designed for a different use case, such as providing burglar alarms. In addition, they tend to be limited and confined to one function, meaning the individual trying to warn others and raise a response may have to switch between panic buttons, phones and workplace public address systems to do so.

Thankfully, innovation in safety and security technology is progressing rapidly. New tools are making workplace violence prevention and containment easier, and compliance more affordable than ever before, and insurers should familiarize themselves with what’s available.

One option is to implement advanced detection and alert solutions that employ a streamlined one-push system to alert the relevant authorities, get workers to a safe place and provide for a remote, if not in-person, emergency response, generally in seconds rather than minutes. Such systems are designed to prevent or mitigate mass shootings, active assailant threats and workplace violence.

Insurers’ new responsibilities under the California bill may look onerous, but a recognition of these duties and early action will put carriers on the front foot and prepare them well for similar legislation elsewhere.

Though the prospect of litigation and higher costs are concerning, the legislation also provides a genuine opportunity for insurers to enhance their reputation and demonstrate their social purpose. By playing a risk prevention role, today’s insurers can protect millions of lives from injury or death in the workplace – a role that could scarcely be more significant.