On June 29, 2023, the Insurance Journal reported that the total workers’ compensation-related expenses and losses incurred by insurance companies in California in 2022 is approximately $15 billion. The full report was put together by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB). California state law mandates that workers’ compensation insurers provide comprehensive financial information to the public each year. Here, our Bakersfield workers’ compensation defense law firm highlights the official numbers on workers’ compensation claims in California in 2022.
Medical Costs Total $4.4 Billion (Hospital, Physician, and Medical-Legal Costs)
In 2022, a significant portion of the workers’ compensation losses for insurance companies was attributed to medical costs, totaling $4.4 billion. It is a significant figure that highlights the profound impact of hospital expenses, physician fees, and medical-legal costs in the workers’ compensation landscape. Hospital costs accounted for the lion’s share, driven by the increasing complexity of cases and the general surge in healthcare expenses. Physician fees also contributed significantly, reflecting the essential role doctors play in diagnosing, treating, and managing workers’ injuries.
Indemnity Benefits Total Another $4 Billion
Indemnity benefits constituted another critical component of the losses, amounting to $4 billion. Indemnity benefits are payments made to workers to compensate for lost wages when they are unable to perform their regular duties due to work-related injuries or illnesses. The substantial figure demonstrates the severity and duration of disabilities that workers incurred. Notably, vocational rehabilitation services are also classified as indemnity benefits.
The Remaining $6.5 Billion Costs Represent Expenses
Aside from medical costs and indemnity benefits, the remaining $6.5 billion in losses and expenses for insurance companies in workers’ compensation claims are various expenditures. These include administrative costs, such as salaries and overheads for claims processing, and costs associated with combating fraud. Beyond those costs, this category covers expenses like commissions to insurance agents, state assessments, and the establishment of reserves for future claims. The WCIRB report provides a more detailed breakdown of workers’ compensation insurer overhead expenses.
Workers’ Compensation Insurers Collected $15.3 Billion in Premiums, Paid Out $15 Billion
While the total losses and expenses stood at $15 billion, the workers’ compensation insurers managed to collect $15.3 billion in premiums during the same period. In other words, the companies that serve the workers’ compensation insurance market in California collectively made approximately $300 million in profits in 2022. For reference, both losses/expenses and revenue (workers’ compensation premiums) were up significantly compared to the previous year.
Get Legal Help From a Workers’ Compensation Defense Attorney in California
At Yrulegui & Roberts, our California workers’ compensation defense lawyers are always willing to go the extra mile to provide the top level of service to our clients. Give us a phone call now or send us a direct message for your confidential, no strings attached initial appointment. Our firm handles workers’ compensation defense matters in Bakersfield, Kern County, and the communities beyond.