California is the largest state for workers compensation insurance premiums. So it's safe to say that if carriers in California are paying out $1.22 for every dollar of premium collected and have not made a profit since 2007, then workers comp clearly has not been a profitable line for insurance companies. We know that many states are increasing their rates and we know that many carriers are increasing their premiums, but only time will tell what increases will really work to make workers comp a profitable line for insurance companies. There are only three ways that a carrier can test the waters. Either stop writing comp, go out of business, or RAISE PREMIUMS. California sets the example for the rest of the nation. If you are a broker who has a large book of workers comp, you should consider ways to reduce your clients' premiums now! A simple and quick solution with no out of pocket expenses is workers compensation premium recovery.   

Kelly Johnson – Sacramento Business Journal – June 28, 2012

Insurers that cover Californians who are injured on the job lost a little more money last year on each buck of premium they collected, according to a new report.

California’s workers’ compensation insurers on average in 2011 spent an estimated $1.22 on claims and expenses for every dollar of premium they collected, according to the Workers’ Compensation Insurance Rating Bureau of California. That compares to $1.17 in both 2010 and 2009, $1.01 in 2008 and 85 cents in 2007.

The estimates do not account for premium or profits or losses that insurers passed along to reinsurers. The numbers also don’t take into account any deductible credits, rating plan adjustments or non-standard workers’ comp business, such as policies in which employers self-insure most of their risk.

Workers’ comp insurers earned premiums of $10.4 billion in 2011, compared to $9.6 billion the previous year, the Rating Bureau reported this week.

Some 74 percent of the premium dollars went for claims, with the other 48 percent going for expenses.

In other findings, the Rating Bureau reported that $4.4 billion, or 60 percent of the workers’ comp claims payments in 2011, were for medical services. The previous year the amount was $4.3 billion. Physicians picked up $1.5 billion of that $4.4 billion for their medical treatment— the same dollar figure as the previous year. Injured workers received $987 million in 2011, up from $822 million in 2010.

Medical cost containment programs, meanwhile, cost the workers’ cost system $384 million last year, the Rating Bureau said. That’s up from $356 million in 2010 and just $197 million in 2005.

Some $3 billion last year went to injured workers for lost-time benefits, including vocational rehabilitation benefits.