History

Red-Letter Dates, Plus a Few Notable Events

1911 | 1913 | 1914 | 1915 | 1918 | 1922 | 1929 | 1933 | 1935 | 1939 | 1945 | 1952 | 1955 | 1960 | 1965 | 1968 | 1972 | 1977 | 1989 | 1993 | 1996 | 2003 | 2004

1911 - Employers seek protection from injury-related litigation, and workers seek assurance of financial support while recovering from work-related injuries. As a result, reformers adopt the Roseberry Act, a voluntary workers’ compensation plan. But few employers opt into the system, leading to calls for stronger laws.

1913 - The Legislature passes the Boynton Act, which creates a no-fault workers’ compensation system and mandates that all employers (with a few exceptions) provide such coverage for their employees. Among its many provisions, the Act establishes a “minimum rate” law to ensure that premiums charged will be sufficient to provide financial stability for the system.

1914 - State Compensation Insurance Fund, established by the Boynton Act, opens its doors at 525 Market Street in San Francisco. Its mission is to provide an available market for workers’ compensation insurance at fair rates, and to serve as a model for all carriers. In accordance with the Boynton Act, State Fund provides coverage at cost while remaining self-supporting. Though the Act appropriates $100,000 to launch the organization, State Fund never uses any of that seed money. Nevertheless, State Fund finishes its first year with $547,161.24 in premium.

1915 - The Industrial Accident Commission recommends the hiring of a traveling medical inspector to “diminish the abuse, now frequent, of over-stay in hospitals” by injured workers. These over-stays, often on the advice of doctors, are causing increased costs.

1918 - State Fund’s overhead costs equal 11.79 percent of net premiums received. Meanwhile, as several State Fund employees leave work to fight in World War I, management solicits replacement office workers aged 16 to 20 for a monthly salary of $40.

1922 - Management issues a memo to State Fund department heads noting that staff members are using an average of 43 pencils each per year. Subsequently, to control skyrocketing costs, each employee receives only two pencils at a time, and submits stubs of used pencils before receiving replacements.

1929 - The Legislature increases the maximum weekly indemnity payments for an injured worker from $20.83 to $25.00. In the event of a work-related death of a worker with no dependents, a carrier must not only pay $150 in funeral expenses but also contribute $300 to a fund that the Industrial Accident Commission manages. The Insurance Commissioner orders a 4.1 percent rate increase to offset these new costs.

1933 - The State of California announces it has insufficient funds to meet current disbursements, and that it will issue interest-bearing warrants in lieu of checks. However, State Fund continues to make timely payments to injured workers, medical providers, and policyholders, as well as salary payments to its own employees.

1935 - At the height of the Great Depression, 18 private workers’ compensation insurance carriers suffer insolvency, and approximately $2 million in industry claims go unpaid. State Fund, however, continues to pay benefits timely.

1939 - Rates are reduced 8.8 percent. State Fund now employs 475 people, of whom 349 work out of the San Francisco office and 126 are based in Los Angeles.

1945 - New legislation creates a Board of Directors for State Fund, moving it further away from direct State administration.

1952 - Mutual Insurance Agents of California passes a resolution calling on Governor Earl Warren to prohibit State Fund from issuing any policy unless the risk first receives declinations from two private carriers.

1955 - State Fund announces the creation of an Electronic Data Processing Study Team to determine whether this new technology can be integrated into the Fund’s processes. As a result of this study, State Fund purchases an IBM 702 four years later.

1960 - State Fund moves into its new Home Office at 525 Golden Gate Ave., San Francisco. Built for $4.3 million, the facility will house 500 State Fund employees in its top five floors and lease the bottom two floors to tenants.

1965 - State Fund begins dispersing claims-adjusting duties to District Offices in order to bring services “much closer to the persons to be served.”

1968 - State Fund “flattens” its organizational structure by giving increased authority to District Managers.

1972 - State Fund exchanges a parcel of property it owns at 11th and Market Streets for a lot at 9th and Market in San Francisco.

1977 - State Fund moves into its newly completed, 16-story Home Office building at 9th and Market Streets.

1989 - The Legislature adopts reforms designed to reduce medical and legal expenses.

1993 - Governor Pete Wilson signs a new round of reforms to reduce costs and curb abuse of workers’ compensation. The legislation repeals the minimum-rate law, effective in 1995. The new “open rating” plan sets off a period of intense competition among private insurers. While other carriers slash rates to below cost to win increased market share, State Fund maintains adequate rates. As a result, many thousands of employers leave State Fund to obtain lower-priced policies from private carriers.

1996 - As part of his Competitive Government Initiative, Governor Wilson commissions a consulting actuary firm to study the feasibility of “privatizing” State Fund. The business community roundly denounces privatization, and the governor abandons the proposal.

2003 - As result of the severe underpricing since 1995 spurred by open rating, 28 private carriers have either suffered insolvency or have stopped writing workers’ compensation policies in California. Fulfilling its constitutional mandate to provide an available market, State Fund writes policies for many thousands of employers unable to find coverage elsewhere.

2004 - State Fund marks its 90th year of providing workers’ compensation insurance -- and only workers’ compensation insurance. In California -- and only in California.