The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released its report on workers’ compensation losses and expenses for 2021. This annual report is required by Section 11759.1 of the California Insurance Code.

Medical losses paid in 2021 were $4.4 billion, or 53 percent of total loss payments.This figure includes $55.6 million in medical payments made in 2021 for COVID-19 claims.

The largest increase in medical payments was related to medical-legal evaluations in that a significant portion of the payments made for medical-legal evaluations were under the new Medical-Legal Fee Schedule adopted effective April 1, 2021.

Orthopedic evaluations accounted for about 54% of the cost of all medical-legal evaluations. The average cost of a medical-legal evaluation was $1,554 in 2021. Psychiatric evaluations were the most expensive, averaging $2,826.

Indemnity benefits paid in 2021 were $3.8 billion, or 47 percent of total loss payments.

Of this amount, temporary disability benefits accounted for 54 percent of indemnity payments and permanent partial disability benefits accounted for 35 percent.

In total, about $67 million in vocational rehabilitation related benefits were paid in calendar year 2021. This was 1.8% of all indemnity payments in 2021, of which 97% was for non-transferable education vouchers. For comparison purposes, in 2020, vocational rehabilitation benefits paid was $73 million, or 2.0% of all indemnity payments, of which 97% was for non-transferable education vouchers.

Calendar year 2021 earned premium totaled $13.6 billion as compared to the $14.1 billion of premium earned in 2020.

Insurer incurred loss adjustment expenses (allocated and unallocated) in 2021 were $2.2 billion, or 16% of earned premium. This includes the full cost to insurers of administering, adjudicating and settling claims. Incurred loss adjustment expenses include $807 million in defense attorney expenses incurred in 2021. (For comparison purposes, in 2020, incurred loss adjustment expenses were 13% of earned premium, including $828 million in defense attorney expenses.)

Although generally part of incurred indemnity losses rather than expenses, the amount paid in 2021 to applicant attorneys was derived from the WCIRB’s Annual Expense Call. In 2021, applicant attorneys were paid $389 million. (In 2020, applicant attorneys were paid $402 million.

In total, California insurers incurred $5.4 billion in expenses in 2021, or 39% of 2020 earned premium. (For comparison purposes, in 2020, total incurred expenses were 35% of earned premium.)

Total insurer combined losses and expenses incurred in 2021 were $13.1 billion, or 96 percent of calendar year premium, compared to $12 billion (or 85 percent of calendar year premium) in 2020.