California PEO Loss Ratio Study

Because of the speed in which PEOs report payroll and premium for client companies, we are able to show live heat maps back to our PEO community representing areas where both average claims cost and activity are the highest.  On the graphic below, we have highlighted the state of California which represents 18% of workers’ compensation premium for the country; as a result, trends in California tend to be much more meaningful than other states.  The visual below synthesized $3 Billion of payroll information, $155 Million of workers’ compensation premiums, and 5,613 claims.  Countrywide our data aggregates more than $19 Billion of payroll information, $500 Million of workers’ compensation premiums, and 31,000 claims dating back to January 1 2008.  It is not a myth that claims tend to cost more in both metropolitan cities as well as southern California.

RiskMD 4x Faster Than Bureaus

Every time our PEO clients run a payroll, our RiskMD heat maps refresh in real-time, and allow our clients to turn risk into reward.  By understanding data, PEOs can evolve their workers’ compensation platforms into profit centers.  RiskMD synthesizes our data 1.5 years faster than anyone else and an amazing 4 years faster than national and state bureaus.  We can get in and out of areas of profitability and duress in a given class code, zip code, county, or state.

Risk MD Advantages for Making Your Workers Compensation Platform a Profit Center

The advantage to using RiskMD data is that we know where claims are going to be higher than average 3.5 years before bureau information is released.  All of traditional workers’ compensation placements, which represent 92% of the market, do not know payroll and premium until post audit.  Actuarial bureaus then get this information approximately 4-6 months thereafter and use it for rate making purposes approximately one year after that.  As a result, the data used to promulgate workers’ compensation rates countrywide is from the years 2006-2010.  The data you are seeing illuminated on this gauge is as of last Friday (3/21/14).

PEOs should be very bullish in the state of California

PEOs do need to realize that there are wider ranges of results than in every other state (consider average cost per claim and percentage of claims litigated).  There exists a wide range of profitability and non-profitability in California and therefore it needs to be treated as multiple states in its own due to its size, as well as socioeconomic differences within its territory.  In fact: larger carriers use territorial multipliers where more/less rate is charged depending on the county in question.  We feel that we can get more granular than that, by identifying zip codes rather than counties that have the highest averages.

While the data pool will never have as much credibility as “every flip of the coin”, it certainly provides a credible benchmark to show trend in key areas like the state of California.  Click the graphic to zoom in.

RiskMD Data Claims Cost in Real-Time Based on Population Growth

– This view provides an enhanced visualization of the location of claim occurrences by zip code.  The data includes all Risk Transfer Programs claims occurring between 1/1/2008 and 3/21/2014.  This view is updated 3-5 times per week when a new claims files are available to push into our proprietary data store.
– The size of each circle indicates total claim count for the given zip code. The color indicates average cost per claim.
– The data set overlay (colors) indicate population growth by zip code for the years 2009-2014.