And they are still not closing the gap. They are just not enough to take care of increased costs coming through the system. Once again, a large part of the problem goes back to some 1990s legislation. The Physicians Presumption Law was passed in 1995 to prevent injured or sick workers from running up costs by visiting multiple doctors. In effect, the high cost of several doctor visits has been replaced by the high cost of larger indemnity payments.
Large companies appear to be handling the workers' comp issue more easily than smaller ones.
Cisco Systems is absorbing low severity workers' compensation losses internally with its program. The premium is derived from loss frequency and severity experience. The more risk absorbed in-house, the less costly the ultimate risk transfer. Another alternative is using a captive for workers' comp. But he has no regrets about sticking with the captive, even as workers' compensation and other lines softened dramatically in recent years.