From San Diego in the south to Eureka up north, State
Compensation Insurance Fund (State Fund) keeps workers in the
Golden State covered. Run like a mutual company, State Fund is a
not-for-profit, public enterprise fund. Its primary product is
workers' compensation insurance but the company also offers claims
management, coordinated care plans, and loss control services to
policyholders. Employers can purchase coverage directly from the
insurer or through independent brokers. It boasts some 130,000
policyholders. As the insurer of last resort, the independent State
Fund was established by the California legislature in 1914.
While it operates in a self-sufficient manner, the company's
board of directors and chairman are appointed by the governor of
California. The company has some 130,000 policyholders; many of its
clients are small and new businesses.
In addition to workers' compensation coverage, State Fund offers
accident prevention services and return-to-work programs at no
Customers can contact State Fund representatives at offices
stretching from Eureka to San Diego.
Sales and Marketing
State Fund provides sales, marketing, and support services
through its offices located across the state. Its branch locations
employ claims adjusters, loss-control representatives, ergonomics
specialists, and industrial hygienists.
Net sales increased by 53% to $1.6 billion in 2014. However,
incurred losses and loss adjustment expenses led to a slight
decrease in net income, which fell 1% to $37.1 million. Cash flow
from operations also dropped, slipping 53% to $185.8 million as a
result of changes in benefits and loss-related payments.
Despite its status as a quasi-public business, State Fund
employees are considered state civil servants and as such have been
vulnerable to California budget crunches and cuts in the last few
years. Overall, the company expects its cost-control efforts to
allow it to maintain fair pricing standards and therefore serve a
larger portion of the workers' compensation market in California.
Efforts to attract new business include offering group discounts,
merit rating plans, claims-free credits, and low-premium plans for
select customers. It has also enhanced its online service
In 2014 continued making moves to strengthen its financial
position. For example, it increased its overall loss and loss
adjustment expense reserve position by $250 million. It also
continued its recently implemented tiered rating system, which was
designed to allow more accurate policyholder risks, thereby making
the firm able to offer fair pricing to more employers. (Upon
evaluation of this structure, State Fund discovered that its group
discount program was redundant, so it discontinued that plan.)
Also in 2014, State Fund began providing free training for its
in-network physicians to offer alternatives to opiod prescriptions
in the treatment of pain.
State Fund has undergone a number of leadership and board
changes in recent years following investigations into
conflict-of-interest reports. An sweeping internal review begun in
late 2006 revealed conflict-of-interest at several levels of the
organization and prompted the resignation of two directors and
State Fund's president James Tudor. (The firm has gone through
several CEO since then.) A multi-agency criminal investigation was
also launched as a result of its findings; that investigation was
closed in 2011 without any charges filed against the company.