California Workers Compensation Benefit Utilization - A Study of Changes in Frequency and Severity in Response to Changes in Statutory Workers Compensation

Traditionally, workers compensation insurance rate-making in California assumed that the utilization of benefits was independent of changes in statutory benefit levels. This assumption was retained for many years in the face of growing evidence that changes in statutory benefits indirectly affected the utilization of those benefits. Because the overall level of benefit utilization is a function of many factors, however, it was difficult to isolate which changes in utilization resulted from changes in statutory benefits and which resulted from changes in economic or social variables, randomness, or other factors. This paper explores and attempts to quantify the causal link between changes in statutory benefit levels and changes in the utilization of workers compensation benefits.