Message From the President

This year marks State Fund’s 100th anniversary of providing California business with a strong and stable option for their workers’ compensation insurance. State Fund has played an important role in the state’s economy – and in the workers’ compensation industry – for a century. As California grew and changed over the years, State Fund transformed to address new employer and economic realities. Along the way, we always worked hard to improve workplace safety and to restore injured workers.

Since the California State Legislature created State Fund in 1914, our commitment has always been to serve as a reliable partner for California’s employers. We did this as industry grew in the 1920s, and as the country struggled through the Depression in the 1930s. California flourished in the 1940s and State Fund grew to more than 400 employees to serve the thriving economy. We expanded our presence throughout the state in the following decades, serving businesses from a wide range of industries. Today, State Fund provides coverage to approximately 130,000 policyholders, administers more than $1.2 billion in premiums, handles more than 112,000 claims annually, and oversees nearly $20 billion in assets.

State Fund has seen tremendous successes in one hundred years of doing business. We’ve supported the businesses that shaped California to succeed and grow. From builders to restaurateurs, from farmers to retailers, State Fund has been there every step of the way. Tools and processes developed by State Fund have influenced workplace safety and restoration of injured workers – not only here, but across the country.

We’ve weathered some major challenges in the last century as well. For example, when open rating was enacted in the 1990s, some policyholders left State Fund for providers that offered low, but unsustainable, rates. Just a decade later, this shift eventually led dozens of insurance carriers to go out of business – and State Fund stepped in to provide coverage for tens of thousands of employers who weren’t able to get coverage elsewhere.

State Fund continues to transform in response to changes in the economy. In 2010, we launched an ambitious plan to redesign our operations, improve our efficiency, and reduce costs to California’s employers. And while our transformation work continues, today we are a financially stronger and more efficient organization. These efforts have allowed State Fund to:

  • - Reduce annual operating costs by $300 million;
  • - Declare policyholder dividends for the past three years, totaling approximately $250 million;
  • - Institute a new pricing model to more accurately price businesses;
  • - Launch new technology that improves access to prices, quote speeds and customer service; and
  • - Reduce our inventory of older claims through responsible settlements.

Last year, State Fund strengthened our value to policyholders by introducing tiered rating, which significantly improved our ability to accurately price individual risks.  And with the introduction of our tiered pricing policy, on March 1, 2013, State Fund filed a seven percent rate reduction in anticipation of savings due to SB 863 workers’ compensation reforms.

Key financial highlights for 2013 include:

  • - A $100 million dividend;
  • - Policyholders’ surplus increase of six percent compared to last year;
  • - Losses and loss adjustment expenses decrease of six and a half percent; and
  • - More than 98.4 percent of our bond portfolio receiving the National Association of Insurance Commissioners’ highest quality credit rating.

One hundred years ago, State Fund’s purpose was to provide fair prices and excellent service, to create stability in the marketplace, and to deliver significant value to California employers and injured workers. We are committed to the same purpose today, and look forward to what the future brings.

Please take a look back at our last 100 years by visiting our Centennial timeline.

Carol Newman
Acting President and CEO

Disclaimer statement: Under California law it is unlawful for an insurer to promise the future payment of dividends under an unexpired workers' compensation insurance policy or to misrepresent the conditions for dividend payment. Dividends are payable only pursuant to conditions determined by the Board of Directors or other governing board of the Company following policy expiration. It is a misdemeanor for any insurer or officer or agent thereof, or any insurance broker or solicitor, to promise the payment of future workers' compensation dividends. Past dividend performance is no guarantee of an insurer's future dividend performance.