(510) 286-2932        jyoung@boxerlaw.com

Our Blog

The Year of the Pig. Or the boar, to be exact. Gung Hay Fat Choy to you on the Chinese Lunar New Year. It’s one of workerscompzone’s favorite holidays.

Being a native North Carolinian, I have a natural affinity to pigs. North Carolina is one barbecue-obsessed state, and is one of the largest pork producing states in the nation. I don’t have a thing against pigs.

But I’ve been thinking about pigs and workers’ comp today.

We live in a free-market economy. Americans believe that companies have the right to earn a fair profit. But can profits in a social welfare system — like workers’ comp — become excessive? What if the pendulum swings so far that the system no longer serves the workers it was created to compensate?

Consider this: Based on WCIRB (that’s the Workers Compensation Insurance Rating Bureau) information, California workers’ comp premiums were $23.6 billion in 2004. Out of $23.6 billion in premiums, the following were paid:

$8.5 billion paid in benefits to workers
$5.4 billion in insurer expenses

This left insurer profits of $9.7 billion. Total insurer expenses plus profit equaled $15.1 billion.

Repeat. Out of a system collecting $23.6 billion in profits, benefits to workers were $8.5 billion. Slightly more than a third. Starts to smell funny, doesn’t it?

Yes, premiums have come down since 2004 for many employers. The system has been squeezed so that it is now smaller. But carrier profits still probably exceed the 40% level.

Year of the pig(s) indeed.

Julius Young
www.boxerlaw.com

Category: Political developments

Julius Young

Comments are closed.