Report 2019-106 Recommendation 1 Responses

Report 2019-106: Workers' Compensation Insurance: Some State Agencies Are Paying Millions of Dollars More Than Necessary to Provide Benefits to Their Employees (Release Date: November 2019)

Recommendation #1 To: Human Resources, California Department of

To ensure that all state agencies provide workers' compensation in the most cost-effective manner, CalHR should provide each agency that purchases workers' compensation insurance with a cost-benefit analysis every five years that compares the cost of purchasing this insurance through State Fund with the cost of obtaining coverage through the master agreement. It should begin providing these analyses to state agencies no later than six months after the Legislature gives it authority to request the necessary information from these agencies.

6-Month Agency Response

CalHR is in the process of implementing this recommendation.

State Fund has provided a report comparing the estimated annual premium amounts to the estimated total costs under the master agreement. CalHR is in the process of providing this information in writing to each department with an estimated annual premium amount that exceeds $100,000. These departments will be invited to participate in a teleconference to discuss the results and answer any questions they might have.

  • Estimated Completion Date: August 31, 2020
  • Response Date: May 2020

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

CalHR is in the process of implementing this recommendation.

State Fund has agreed to provide actuarial expertise and will work with CalHR to produce a report comparing the estimated annual premium amounts to the estimated total costs under the master agreement. CalHR will provide this information in writing along with an invitation to meet to discuss the results to each department with an estimated annual premium amount that exceeds $100,000.

These departments represented 82 percent of the total premium paid by the state in 2018-19. Reliable estimated costs are not possible for smaller entities due to the small sample size and smaller entities are more likely to be significantly negatively impacted by a large loss.

In addition, CalHR and State Fund will work with any of the insured departments who express interest, regardless of their size. To date, two departments have reached out to CalHR for additional information.

  • Estimated Completion Date: April 2020
  • Response Date: January 2020

California State Auditor's Assessment of 60-Day Status: Pending


All Recommendations in 2019-106

Agency responses received are posted verbatim.