Impact on Employer Costs

According to the Workers' Compensation Insurance Rating Bureau (WCIRB), the average statewide insurer rate during the third quarter of 2007 was $2.49 per $100 of payroll, which is 61 percent below the average rate charged during the second half of 2003. The WCIRB estimates that medical and indemnity costs are approximately $14 billion less than they would have been in 2007 absent the legislative reforms.

Employers' options for workers' compensation insurance have increased dramatically due to more competition in the marketplace. Since reform legislation was enacted, 21 new insurers have started writing workers' compensation policies in California. Market share for the State Compensation Insurance Fund, which acts as the insurer of last resort in California, has been reduced by approximately half after peaking at 53 percent of the market in 2003.

Public sector employers, including cities, counties and school districts have saved an estimated $1.9 billion as a result of reforms. The savings would have been sufficient to pay the annual salaries of 23,000 public school teachers and 25,000 police officers in fiscal year 2005-06.

Despite these cost savings, California remains one of the most expensive states for workers' compensation coverage. According to one analysis, California's rate per $100 of payroll remains 166 percent higher than the national median. Rates charged in neighboring states Arizona, Nevada and Oregon, meanwhile, are below the national median.