Highlights from the 2016 California Workers’ Compensation & Risk Conference

Highlights from the 2016 California Workers’ Compensation & Risk Conference

Multiple Authors October 25, 2016 Posted in: Blog Posts, Workers’ Compensation

Co-authored by Jing Liu and Laura Maxwell.

Pinnacle Actuarial Resources, Inc. Consultants recently attended the California Workers' Compensation & Risk (CWC & Risk) Conference in Dana Point, CA. Participating in this event is a great way to keep up with changes in the workers' compensation market in the state of California. There were over 1,500 attendees, and the exhibitors included law firms, third-party administrators (TPAs), healthcare service providers and injury prevention companies. CWC & Risk 2016 focused on new workers' compensation legal requirements and cost-containment challenges faced by California employers.

The event started with an employer & stakeholder panel discussion entitled, “Evolution of Workers' Comp & Risk.” Panel representatives spanned all aspects of workers' compensation:  Christine Baker (CA Department of Industrial Relations), Lisa Kelly (Boeing), William Zachry (Albertsons), David North (Sedgwick Claims Management Services, Inc.), Dr. Roman Kownacki (The Permanente Medical Group, Inc.), Robert G. Rassp, Esq. (plaintiff’s attorney) and was moderated by Mark Walls (Safety National). The panel addressed a variety of topics, including:

  • What is working in California?  There was general consensus among the panelists that CA workers' compensation is in much better shape than it was several years ago.
  • What could be done to improve?  One major theme was better communication with the injured worker.  Dr. Kownacki discussed patients being confused by the forms and Mr. Zachry stated that many of the claimants who use a lawyer were concerned about the treatment they would receive.
  • What is the future of 24-hour coverage?  This segment centered on discussion of the differences between the healthcare system and workers' compensation.

Since the implementation of SB 863, the California Department of Industrial Relations has seen significant decreases in average medical cost per indemnity claim, and frequency of claims has remained fairly stable. However, California continues to see year-on-year increases in loss adjustment expenses, with current ratios of allocated loss adjustment expense to loss hovering around 35%. While workers' compensation results continue to improve, the panel expressed specific concern over the increase in cumulative trauma cases, as well as the disparity of results between northern and southern California. The Los Angeles basin is experiencing higher loss adjustment expense, higher average medical cost per claim and higher cumulative trauma cases than the rest of the state. It also holds the majority of the liens filed in California. 

Christine Baker spoke again later about legislative updates. Ms. Baker discussed AB 1124, which requires the adoption of an evidence-based workers' compensation drug formulary by July 1, 2017, and SB 1160, which reduces most utilization reviews in the first 30 days following a work-related injury. AB 1224 would require the Division of Workers' Compensation Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers' compensation system if convicted of fraud. Many of the audience questions centered on how to handle the large volume of liens in Southern California, including those that occur past the statute of limitations. The Department of Industrial Relations hopes that these new regulations will reduce fraud. In fact, a recent Workers' Compensation Insurance Rating Bureau of California (WCIRB) press release stated that the upcoming reduction in its loss cost filing for 1/1/2017 was amended partly due to the passage of these regulations.

CWC & Risk 2016 offered a wide range of additional sessions, including occupational and mental health in the workplace, effective risk-management practices, claims litigation issues, cyber liability trends and how drones will impact our lives, laws and insurance. The conference also provided many opportunities for networking during golf tournaments, receptions and a casino night. For a look at photos from this year’s CWC & Risk Conference, click here.

Laura Maxwell is a Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the San Francisco, California office. She has over 25 years of actuarial experience in the property/casualty insurance industry and has provided consulting services since 2003. Laura is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. She currently serves the Casualty Actuarial Society as a member of the Examination Committee and Chair of the Webinar Committee.

Jing Liu is a Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the San Francisco, California office. She has over 15 years of experience in the property/casualty insurance industry, in both actuarial and underwriting capacities. Her experience includes assessing reserve and funding adequacy for captives, managing a portfolio of reinsurance treaties as well as ratemaking and filings. Jing is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries.

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