CALIFORNIA PUBLIC SECTOR SELF-INSURANCE CAJPA

Transcription

1 CALIFORNIA PUBLIC SECTOR SELF-INSURANCE CAJPA April 29, 2015 JON WROTEN, CHIEF OFFICE OF SELF INSURANCE PLANS

2 SELF INSURANCE - BY THE NUMBERS 9,849+ Employers with approved SI Plans $176+ Billion of Insured Payroll 4+ Million California Workers protected 1 in 4 CA Workers covered by SI Plans

3 Senate Bill No. 863 LABOR CODE SECTION PROVIDE DETAILED INFORMATION TO EVALUATE: COSTS OF ADMINISTRATION WC BENEFIT EXPENDITURES SOLVENCY PERFORMANCE

4 SELF INSURANCE - BY THE NUMBERS PRIVATE PUBLIC Employees 2,071,962 1,891,873 Payroll $ 79.5 BB $ 96.6 BB Estimated Liabilities (EFL) $ 5.4 BB $5,423,398,698 $ 7.4 BB $7,389,371,509 Open Claims 93, ,375 Average Claim Reserve $57,729 $41,195 *2013 for comparison

5 STAYING INFORMED OF CHANGES UPPER RIGHT CORNER of Website Banner Click on Press Room Under Quick Links Click Subscribe to Distribution List Enter , check OSIP and subscribe

6 CALIFORNIA PUBLIC SECTOR SELF-INSURANCE CAJPA April 29, 2015 MARK PRIVEN, FCAS, MAAA BICKMORE

7 Public Sector Self-Insurance Scope 1. Benefit Expenditures 2. Claims Administration 3. Solvency Benchmarking, Outliers

8 Benefits Expenditures Region Type of Entity Claims Administrator JPA vs. Individual X Loss Rates Claim Frequency Average Claim Size Claim Closure Payout Pattern

9 Benefits Expenditures Type of Agency

10 Benefits Expenditures Region

11 Benefits Expenditures JPA vs. Individual: JPAs had slightly lower loss rates. May be due to differences in urban/rural. TPA vs. Self-Administered: Almost no difference in loss rates

12 Benefit Expenditures: Claimant Age Average Incurred Loss & ALAE FY 2008/09

13 Benefits Expenditures: Claimant Age Distribution of Reported Claims Permanent Disability Temporary Disability Medical Only FY 2008/09

14 Benefits Expenditures Recommendations Investigate Regional Differences Investigate Claimant Age Differences Broaden public information for benchmarking Consider expanding OSIP data collection # of Years Accident vs. Report Year ALAE Temporary vs. Permanent Disability Region Primary vs. Excess

15 Claims Administration DWC Performance Audit Review Reviewed Results Entities, 9,995 Files Audited Performance Rating & Penalties by Category By Location, Type of Adjuster, JPA vs. Individual

16 Claims Administration Performance Rating by Region PAR

17 Claims Administration Performance Rating by Administrator Overall Mean 1.32 Overall Median 1.16 PAR

18 Claims Administration PAR: Region x Administrator PAR

19 Claims Administration JPA vs. Individual: Almost no difference in performance rating (after adjusting for region).

20 Claims Administration Medical Cost Containment (MCC) Primarily Bill Review & Utilization Review Substantial Cost No public information available for public selfinsurers Difficult for self-insurers to evaluate Our findings: Based on very limited data

21 Claims Administration MCC as a % of Medical Payments CWCI: Medical Utilization & Cost Analysis July 2014 Report Bickmore: Based on Survey

22 Claims Administration Bill Review Cost Reduction Based on Survey

23 Claims Administration Bill Review Cost as a % of Medical Increase may be due to immature year Based on Survey

24 Claims Administration Utilization Review Based on Survey

25 Claims Administration Utilization Review Based on Survey

26 Claims Administration Recommendations Investigate Regional Differences Investigate Differences by Administrator Type Reevaluate scope of PAR Make MCC benchmarking data available UR/BR savings UR/BR costs Transactional Data

27 Solvency Insurers California Insurance Guarantee Association (CIGA) Private Self-Insurers Self-Insurers Security Fund (SISF) Public Self-Insurers

28 Solvency Public Self-Insurance Background There has never been a default (even in cases of bankruptcy) JPA: Members are joint & severally liable None have ever filed for bankruptcy Counties: Subdivisions of the State School Districts: Closely intertwined with the State Biggest Exposure: Individually self-insured cities & special districts.

29 Solvency Public Self-Insurance Surveys Actuarial: Basis for almost all liability estimates Claims Admin.: Almost always included in liability Varies from 2.7% to 9.3% of loss & ALAE Risk Margin: Most do not book risk margin NPV: About 60% of entities discount the liabilities Discount from 7% to 28%, annual rate from 2% to 5.5% Accounting: JPAs - Enterprise Fund Individuals - Internal Service Fund Deficits: About 30% have experienced them in past 10 years

30 Solvency Findings Monitoring: OSIP does not have tools needed to evaluate solvency risk. Would need standardized financial and actuarial information. Benchmarking: Little information exists for entities to benchmark their financial or actuarial information (risk margins, discount rates, etc.)

31 General Finding DIR has authority to collect data relevant to benefits expenditures, claims administration, and solvency (SB 863) Recommend that DIR meet with stakeholders to initiate that process