In This Issue:
- Our Promise of Stability, Security, and Service
- Dual-Wage Construction Classes: The Importance of Keeping Time Cards
- State Fund Ergonomics Services: Comprehensive Injury-Prevention Resources
- New Medicare Reporting Requirements: No Impact on You or Your Clients
- Rate Filing Update: State Fund’s July 1 Rate Increase

Our Promise of Stability, Security, and Service

You may have heard California just passed a budget that includes a proposal to study selling part of State Fund’s assets to help close the state budget deficit. The legislation does require the consent of State Fund’s Board of Directors on the sale of any assets or liabilities. Our Board issued a resolution opposing attempts to sell any part of State Fund. Our Executive Management team and Board are committed to protecting our historic role in the California economy and the assets that are the foundation of our financial strength and stability.

Many people have spoken out against the idea of selling State Fund assets, including the Insurance Commissioner and some of our colleagues in the broker community. As the discussion goes forward, we will continue to work with all stakeholders to ensure that State Fund retains our ability to fulfill our mission of providing California businesses a strong and stable option for their workers’ compensation insurance. In the meantime we want to assure you that we are open for business and will continue to focus on providing outstanding service to our customers.

Responsible Rate Setting

As you know, State Fund filed for a premium increase effective July 1, 2009. We understand the strain that California’s businesses are experiencing. These are uncertain times for the economy, which makes rate setting challenging. We feel it is important to take a long-term approach to pricing. Remember that State Fund premium levels have fallen significantly since 2003, and even after this increase, are still 46 percent below pre-reform levels. You can read more in the Rate Filing Update in this issue of Broker Update Online.

State Fund is a vital provider of workers’ compensation insurance in California. We are dedicated to maintaining our financial strength and open-door policy of serving California’s small and large businesses across all industries, all while providing gold-standard service to our broker community and policyholders.

• State Fund continues to offer various discounts when we underwrite individual accounts, including our Claims Free Credit and Merit Rating, group, and premium discounts.
• We are still the one carrier that can meet all the needs of your book of business.
• State Fund offers high-caliber safety and claims programs to help you serve your clients.

For your clients, State Fund’s no-cost loss-prevention and Return to Work programs help keep workplaces safe, get workers back to work sooner after an injury, and ultimately save business costs.

The Safety-Services Difference

State Fund is focused on attracting and retaining your clients’ business by offering resources that will make a difference to their bottom line. We believe a safe workplace can increase worker productivity and lower the cost of doing business. Our team of safety professionals will help your clients prevent costly work-related injuries. State Fund has more certified safety professionals, industrial hygienists, and ergonomists on staff than any mono-line workers’ compensation carrier in the state. These knowledgeable experts will work with your clients to identify, analyze, and mitigate workplace hazards—all at no extra cost to them.

As State Fund policyholders, your clients also have access to these additional safety resources at no additional cost:

• Loss control staff that visit workplaces and help develop proactive, cost-effective Injury and Illness Prevention Programs.
• A wide range of safety materials and products that help create and maintain a safe work environment for employees: Safety newsletters, posters, pamphlets, brochures, and hazard checklists as well as a large lending library of safety videos.
• Air-sampling surveys to evaluate workplace exposures to a variety of airborne contaminants, including silica, welding fumes, dust, fibers, gases, and chemical vapors.
• An on-site accredited industrial hygiene lab that can efficiently process field samples, such as asbestos.
• Noise-level surveys to measure sound levels and evaluate employee exposures to noise.
• Respirator fit-testing services to evaluate respirator protection as required by Cal/OSHA.

Additionally, you and your clients are cordially invited to attend our Employer Education Series seminars. These free seminars provide valuable information on safety and other workers’ compensation issues that can affect your clients’ businesses. You and your clients may find out more about these seminars (including free online registration).

You may also contact your marketing representative for information about any of the services offered by State Fund. We always look forward to working with you and your clients in providing the highest level of safety services to protect California’s workplaces.

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Dual-Wage Construction Classes: The Importance of Keeping Time Cards

Under California’s dual-wage classification system, clients in the construction industry may pay lower premium rates for employees whose hourly wages are above certain thresholds. Qualifying for the high-wage, low-rate classes requires accurate, verifiable record-keeping. You can help your construction clients by reminding them of the need to record and keep daily time cards or time sheets for all their employees.

In accordance with a WCIRB rules clarification that went into effect in 2008, construction records must clearly show distinct information for each employee, including:

• Daily start and stop times on time logs.
• Hours worked.
• Job duties and type of work performed.
• Wage rates or salary.

State Fund payroll auditors will review these logs during your clients’ premium audit. Without clear verifiable records on hours, duties, and wages, the auditor will assign all construction payroll into the appropriate low-wage, high-rate classifications.

It’s in your clients’ interest to benefit from any lower-rated classifications for which they qualify. With good record-keeping habits, your clients can save premium dollars and streamline the audit process.

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State Fund Ergonomics Services: Comprehensive Injury-Prevention Resources for Clients

State Fund provides ergonomics specialty services at no additional charge to assist your clients in the prevention of work-related musculoskeletal disorder (WMSD) claims. Why is this important?

• WMSD claims account for more than 43 percent of all claims and more than 37 percent of all claims costs, according to a WCIRB report.
• The average cost of a back injury is $45,698, and the average cost of other repetitive-motion injuries is $37,500, according to the California Commission on Health and Safety and Workers’ Compensation (CHSWC).

State Fund is proud to have a team of ergonomic consultants with the education and training to earn professional ergonomist certification. Our ergonomics consultants all hold professional certifications from the Oxford Research Institute (ORI) or Board of Certification in Professional Ergonomics (BCPE). State Fund has also received the ORI’s “Five Star Seal of Ergonomic Excellence” as a Preferred Provider of Ergonomic Services. These ergonomics specialists enable State Fund to offer your clients comprehensive safety services, including:

• Site surveys and written reports – Ergonomics consultants visit client workplaces to identify and evaluate risk factors and suggest control measures that limit the development of WMSDs.
• Education and training programs – Ergonomics consultants are available for “train-the-trainer” and employee education and worksite evaluation training. In addition to direct client training, our ergonomics consultants contribute to the State Fund Employer Education Series of safety seminars throughout California.
• Products and publications – The Ergonomics team has developed the following resources:
• Pamphlets – Information on stretching exercises for office, agriculture, construction, and general industry, available in both English and Spanish.
• Articles – ErgoMatters®, one-page articles addressing various ergonomics topics and case studies.
• Multimedia products — Ergonomics: How May We Help You? is a CD-ROM with a complete tutorial on ergonomics. State Fund’s Back Connection® DVD-ROM is an innovative and interactive tool for identifying and addressing risk factors for back injury.

Your clients can obtain these resources online or by contacting their State Fund loss control consultant or local State Fund office.

State Fund’s professional ergonomics consultants help your clients target the risk factors that result in the highest percentage of claims, by volume and cost. These services represent another resource you can draw on to sell State Fund as the insurer best serving the diverse needs of California employers.

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New Medicare Reporting Requirements: No Impact on You or Your Clients

A recent update to federal Medicare rules has placed new reporting responsibilities on workers’ compensation insurers. State Fund wants to clear up any uncertainty you or your clients may have about the Medicare reporting requirements that will be fully implemented on April 1, 2010.

The revised requirements apply only to insurance providers, including workers’ compensation insurers—brokers and clients do not face any additional reporting obligations. Under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), insurance providers must give information to the federal Centers for Medicare and Medicaid Services (CMS) on claimants who may also qualify for Medicare benefits. In sharing this information, insurance providers will help the Medicare program achieve its objective of having the “primary payer” assume the cost of medical treatment related to the claim.

Business as Usual

For your State Fund-insured clients, it’s business as usual for claims reporting. They need only to continue reporting any workplace employee injuries to State Fund. As a large insurance carrier, State Fund has done the work to update our systems and procedures for compliance with the new Medicare reporting requirements. We will meet our legal obligations for sharing information on Medicare-eligible claimants and are responsible for payments in the unlikely event of any assessed penalties.

If you are interested in finding out more about the new carrier reporting requirements, CMS updates an informational page on Medicare insurer reporting.

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Rate Filing Update: State Fund’s July 1 Rate Increase

State Fund recently filed a midyear rate plan that reflects a 15 percent increase in collectible premium. The revised rates apply to new and renewal workers’ compensation policies with an effective date on or after July 1, 2009.

The principal driver of the premium increase is medical inflation. Medical treatment costs have increased 16 percent annually for the past three years, according to the most recent report published by the WCIRB.

The 15 percent rate increase represents an overall average. Depending on their classifications, some employers may experience more or less than a 15 percent increase.

State Fund premium levels have fallen significantly since 2003, when Governor Schwarzenegger and the Legislature began implementing policy reforms that lowered premiums. Even after this latest increase, our average rates are still 46 percent below pre-reform levels.

We understand the strain that California’s businesses are experiencing in the current economic situation. We continue to offer group discounts, a Merit Rating Plan, and lower-than-average premiums in some classifications and industries. Because of our size and role in the marketplace, State Fund serves as a stabilizing force in the economy, and we are committed to our promise to California. We will continue to maintain our financial strength, our open-door policy of providing workers’ compensation insurance for any employer who needs it, and gold-standard service to our broker community and policyholders.

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