2017 Annual Report President's Letter

Everything we do at State Fund is focused on fulfilling our purpose to provide fairly-priced workers’ compensation insurance, help make workplaces safe, and restore injured workers.

As the guaranteed market for workers’ comp in California, State Fund is fundamentally different than other workers’ compensation insurance companies. We offer coverage to all California businesses and focus our resources on our customers—not shareholders.

State Fund’s unique position in the marketplace means that we are always available to California’s employers as they take risks to create and grow their organizations. We are proud to have served California businesses for more than a century, and we are committed to remaining fiscally sound so we can continue to do so.

I am proud of our 2017 accomplishments, which include:

  • Improving medical outcomes and reducing opioid prescriptions for injured workers.
  • Helping make workplaces safe.
  • Maintaining fiscal strength and stability to serve California businesses and their employees.

Managing the Right Care at the Right Time

Fortunately most workers’ compensation claims are relatively minor and involve a visit or two to the doctor, the injured worker is able to return to work, and life returns to normal.

There are times when a work injury is catastrophic, turning the world upside down for the injured person and their family. Our claims adjusters are highly trained and committed to helping injured workers return to work and build their futures, especially when dealing with life-changing consequences.

After one young man’s life was forever changed in a paralyzing accident, our Major Claims Specialist worked tirelessly on his claim and helped him carve a new path for his future. Read more.

Battling Opioid Addiction

State Fund is vigorously tackling the opioid dependency epidemic and we’ve already seen significant results. Our approach is twofold: 1) prevent future addiction; and 2) help the injured workers we serve who were on high dose opioids either wean off or reduce their opioid medications. In 2014, we implemented a physician education and peer review program designed to reduce opioid prescriptions for injured workers in the claim cases we manage. I’m proud to report that since we began this program:

  • Total opioid prescriptions have decreased by 60 percent.
  • The number of patients taking high doses of opioids has decreased from 1,458 in 2014 to 186 today.

Helping Make California Workplaces Safe

A core part of our mission is preventing injuries. We are passionate about workplace safety and have invested significantly in our safety outreach efforts.

We have an experienced and dedicated team who spend most of their time in the field, building trust with employers and workers, and providing them with the most up-to-date safety information. They also work closely with policyholders to identify areas of risk and actively provide recommendations on how to make workplaces safe.

When State Fund loss prevention engineer Christy Moran first visited a manufacturing policyholder, she encountered an owner who was unaware of potentially dangerous worksite conditions. Christy worked closely with the company owner to build trust and rapport. Because of that relationship, the owner’s trepidation disappeared and Christy became a workplace avenger, transforming worksite into a safer environment for workers. Read more.

Financial Highlights

For more than a century, State Fund has been the strong, stable provider of workers’ compensation insurance that California employers can rely on whenever they need us. The market in California is competitive, which helps drive costs down and also gives employers many options for their workers’ compensation coverage. Even though we’ve seen a drop in premium in 2017, we think that competition is good—and that employers are the winners in that environment. Our financial strength enables us to withstand hard markets and weak economies so we will be here to serve California—today and in the future.

Here are the 2017 financial highlights that are described in detail in this report:

  • We wrote $1.3 billion in premium.
  • Our combined ratio was 149.4 percent, primarily due to the reduction in premium, reduced rates, and a decision to strengthen loss adjustment expense reserves.
  • Our investment income was $619 million.
  • Our net income was $40 million.

Thank you for your continued confidence in State Fund. We are honored to serve California.

Vern Steiner
President and CEO