This month, Wisconsin joined most states in easing employers’ workers’ compensation costs.

Effective October 1, Wisconsin workers’ comp premium rates fell by nearly 2% on average, with the state’s Department of Workforce Development (DWD) estimating collective statewide savings for employers of roughly $36 million over the coming year.

This marks the 11th consecutive year of premium decreases in Wisconsin, in alignment with a national trend of steadily falling rates.

That trend slams to a halt in California, where premiums have risen sharply over the last two years, based on calculations from the state’s independent rating bureau (calculations that we have repeatedly questioned).

California’s state leadership has offered no explanation we find convincing, though payers and their advocates gesture vaguely toward Cumulative Trauma claims and “unlisted” medical services such as Functional Restoration Programs (FRPs).

Employers in Wisconsin and most of the United States have reason to celebrate. California employers should hold Governor Newsom, who is ultimately responsible for the abysmal state of the system driving their costs ever higher, accountable and demand clear, data-backed answers.

Wisconsin: Comp Rates in Freefall

Wisconsin sets premium rates through the Wisconsin Compensation Rating Bureau (WCRB), an independent body that submits rate-adjustment proposals to the Office of the Commissioner of Insurance (OCI) for approval.

The DWD, WCRB, OCI, a Self-Insurers Council, and an advisory council comprising representatives from both employers and labor groups jointly oversee the state’s comp system.

The DWD announced that, on average, Wisconsin employers’ rates dropped by 1.97%, though specific rates will vary by employer. Like many state comp authorities celebrating falling premium rates, the DWD credits continually improving workplace safety for the decreases over the last decade-plus.

In Wisconsin, as in the nation overall, workers’ comp is a firmly profitable line of insurance, outperforming other lines and maintaining consistently healthy combined ratios, the key metric insurers use to measure profitability.

California Employers Left Out in the Cold

Wisconsin’s WCRB is not to be confused with California’s Workers’ Comp Insurance Rating Bureau (WCIRB).

Both are independent rating bureaus entrusted with doing the math and recommending premium rates to the state, but one has consistently delivered good news, while the other…not so much. The California WCIRB has recommended premium increases for the past two years.

Industry observers have accused the WCIRB of “skewing” its data to understate insurer profitability and of offering questionable justifications for its rate-hike recommendations. Among other issues, its reports fail to factor in insurers’ investment returns and the impact of rampant provider reimbursement discount contracts.

Meanwhile, California’s fee schedule rates for provider reimbursement are lower than those in other states (and that’s without factoring in discount contracts). California-specific loss ratio data strongly suggest insurer profitability. Yet California employers pay the fourth-highest rates nationally, with over a third of premium dollars going to administrative and legal expenses, twice the national median.

While most of the country celebrates lower costs, California’s math isn’t mathing, and Governor Newsom is letting employers foot the bill.

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