The California State Compensation Insurance Fund (SCIF) has changed their rates for 2022. While many classes experienced only a slight difference, some were significantly impacted by substantial increases or decreases in base rates.
Below we’ll take a closer look at the SCIF and explore the top 10 classes that might be paying a lot more or less for workers’ compensation insurance in 2022. We’ve included a complete list of the State Fund’s rate changes at the end.
What Is the California State Compensation Insurance Fund (SCIF)?
The California State Compensation Insurance Fund, also known as SCIF or the State Fund, is a nonprofit workers’ compensation insurance company serving businesses based in California. It was established by the state legislature in 1914 and has been providing workers’ comp insurance ever since. Currently, one in four companies in the Golden State uses the State Fund for its workers’ comp, translating to roughly 112,000 policyholders.
While many companies offer workers’ comp insurance in California, there's one thing that makes the State Fund unique—its commitment to serving all businesses in the state, from small start-ups to large, thriving corporations.
This also means that the State Fund functions as a last-resort insurer for California business owners. It provides coverage to businesses unable to find workers’ comp insurance through any other carriers. If you’re a business owner in California who can’t find coverage through any other company, the State Fund might be your only option.
Why Did the State Fund Change Rates for 2022?
Much like other insurance companies, SCIF assigns workers’ comp class codes that are based on the risks associated with different jobs. These class codes are used to estimate rates for workers’ comp. The State Fund assesses its base rates each year and makes changes as needed to stay competitive.
In an email to Hourly, Liz Gallwitz, a spokesperson of the SCIF, says the State Fund’s losses on different classes played a large role in the base rate changes for 2022. You can see the complete list of the rate changes at the end.
Top 10 Classes with the Biggest Increases
The State Fund’s rate changes went into effect in the new year. Business owners may notice significant price hikes or drops in their workers’ compensation rates if they have coverage through SCIF. Classes that may see the largest jump in premiums are below.
With these changes, companies in the tree trimming classification now have base rates that are double what they were in 2021. Sheet metal workers aren’t far behind.
Gallwitz explains that “the businesses we cover in the tree trimming classification have experienced a significant increase in injuries and claims costs over the last several years. Since 2017, we’ve had 16 separate claims in this area that each amounted to more than $1 million in costs.”
As a non-profit, the State Fund decided to raise its rates for tree trimmers, otherwise it would be forced to increase rates on all business classes to make up the difference. “We cannot ask some policyholders to subsidize the rates of other policyholders in different industries.”
To keep rates more fairly distributed, the State Fund looks at the performance of each class before setting the base rate. The classes that perform well end up paying less, and the classes with more claims and costs end up paying more.
SCIF understands that rate changes can be an obstacle for business owners. To help policyholders keep their coverage despite increases, SCIF adjusts their payrolls and class codes and offers payment flexibility. “We’ve also provided more than $44 million in COVID-19 safety support grants to help our policyholders keep their employees and customers safe,” says Gallwitz.
Top 10 Classes with the Biggest Decreases
Not all business classifications saw a rate increase with the State Fund. These 10 classes experienced the biggest rate drops and are likely paying less for workers’ compensation insurance.
What Do These Rate Changes Mean for Your Business?
If your business uses SCIF for its workers’ compensation insurance, make sure to look at the chart below for changes to your class’s base rate. That way you know what to budget for. (Learn more about what wages are subject to workers' comp.)
If your rate went up and you’re struggling to pay your workers’ comp bill, don’t drop your coverage and hope for the best. Not having this protection for your employees is illegal in California and many other states.
Instead, here are a few strategies you can try:
- Shop around: The State Fund doesn't usually have the lowest prices. If you can get coverage elsewhere, you might get a better rate.
- Check your experience rating: If you think your business now qualifies for an experience rating (sometimes called exp-mod or x-mod), or that your rating has improved since your last one was issued, ask your broker. A better x-mod can help lower your rates.
- Create a workplace safety program: The fewer employees who get injured on your watch, the better. If you don’t yet have a safety program, start one. If you need help with this, SCIF offers a safety resource center, Safe At Work California.
- Abide by OSHA Guidelines: Make sure you train your employees to abide by guidelines set for your industry. This helps keep everyone safe, which can lower your rates.
- Check your class codes: Are all your employees classified correctly? If not, you could be paying more than you need to.
These steps can not only help lower your workers’ comp premiums, but even more importantly, provide a safer working environment for your employees.
Hourly Can Help
Whether your base rate goes up or down, Hourly gives you confidence that you’re not paying a penny more than you have to for workers’ comp insurance. That’s because your premiums aren’t based on estimates. Instead, they're synced directly with your real-time payroll data, so you only pay for coverage you're using.
The Complete List of 2022 SCIF Workers’ Comp Rate Changes
Don’t see your classification listed in our top 10 charts? We’ve got you covered with a complete list of the California State Fund’s 2022 base rate changes. Simply find your class to see its percentage of change. (Quick tip: press command or control + F and enter your class code or work description to see how your rate changed.)