workmen compensation insurance

State Compensation Insurance Fund

The State Compensation Insurance Fund (SCIF or State Fund) is a workers' compensation insurer that is operated as a public enterprise created by the U.S. state of California. It is required by state law to maintain its headquarters in San Francisco, but has branch offices all over the state.

State Fund was created by the Boynton Act of 1913, and it started operations in 1914. Around that same time, the voters amended the California Constitution by initiative to guarantee the constitutionality of the state workers' compensation system. State Fund's constitutional basis is found at Article 14, Section 4 of the state constitution:

The Legislature is hereby expressly vested with plenary power, unlimited by any provision of this Constitution, to create, and enforce a complete system of workers' compensation...including the establishment and management of a state compensation insurance fund...

State Fund has over $22 billion in assets and employs approximately 8,000 people (the number varies based on State Fund's current percentage of the market). Historically, with fluctuations depending upon the health of California's workers' compensation market, it has insured an average of 23 percent of the workforce each year since its creation by the Legislature in 1914 but its market share spiked to over 50 percent in years 2002-2004 when a large number of private carriers left the market. It acts as a third party administrator adjusting claims for almost all of the State agencies' employees as well as the majority of employees in high-risk industries that are seen as less profitable for private insurers, like construction or "Mom-and-Pop" small businesses.

California is one of 21 states with a competitive state fund in the workers' compensation insurance market. Several state funds serve as insurers of last resort and act as an example for private companies. Nevertheless, to keep them from crowding out private companies, they operate as nonprofits and return surplus money to policyholders after paying off claims and operating costs. Most write only workers' compensation insurance and only in their home state.

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