State Compensation Insurance Fund (State Fund) business insurance

Overview

The State Compensation Insurance Fund, which calls itself State Fund, is California's competitive state fund for workers' compensation. The Legislature created it in 1914 as a not-for-profit, self-supporting insurer with no shareholders. It runs on premiums and investment income rather than tax dollars, and it sells one thing: California workers' comp with employers' liability coverage.

"Competitive" is the important word. Unlike a monopolistic state fund such as Ohio's or Washington's, State Fund competes with private carriers, and a California employer can buy from it, buy from a private insurer or qualify to self-insure. Insurance Code section 11775 tells the fund to be "fairly competitive with other insurers" and, over time, neither more nor less than self-supporting. It also has a public role: State Fund keeps an open door so every California employer, from the smallest startup up, has a stable option. State Senate analysts have described it as both a competitor and the insurer of last resort for employers that cannot affordably buy coverage from the private market.

State Fund was ranked No. 79 among U.S. business insurers by 2025 commercial lines direct premiums written, with $962.0 million, based on NAIC market share data. All of it is workers' compensation written in California, so it does not appear in any national top-10 line ranking. At home it is a heavyweight. California Department of Insurance market share data for 2025 put it second among comp writers in the state, with about 8.2% of an $11.8 billion market, just behind the AmTrust Financial group. State Fund also handles workers' comp claims for California state agencies under an interagency agreement with CalHR that runs through June 30, 2027.

An 11-member voting board oversees it. The governor appoints nine members and names the chair; the Speaker of the Assembly and the Senate Rules Committee appoint one each. The director of the Department of Industrial Relations sits as a non-voting member. David M. Lanier chairs the board. Vern Steiner has been president and CEO since May 2014. The main administrative office is in Pleasanton; the statutory home office is in Sacramento.

History

State Fund opened in San Francisco in 1914, after the Roseberry and Boynton Acts set up California's workers' comp system. Open rating, which took effect in 1995, made the state's rates advisory. Private carriers cut prices, many below cost, and thousands of employers left State Fund. Governor Pete Wilson studied privatizing the fund in 1996 and dropped the idea after business groups objected.

The underpricing caught up with the market. By State Fund's account, 28 private carriers had become insolvent or stopped writing comp by 2003, and State Fund took on employers that could not find coverage elsewhere. A 2011 Senate Labor Committee analysis says its market share reached 53% by 2003. The 2004 reform law, SB 899, lowered costs, competition returned, and from 2006 the fund shed market share while building reserves and surplus. The same analysis put its share below 20% by 2010.

Those years also brought a governance shake-up. Two board members resigned in 2006 over conflict-of-interest concerns. After an internal investigation in 2007, Lawrence Mulryan served as interim president until the board named Janet Frank president and CEO. In 2008 the Legislature (AB 1874) expanded the board from five to 11 voting members and made State Fund subject to the Public Records Act and the Bagley-Keene Open Meeting Act. Tom Rowe led the fund from 2010 until his resignation in November 2013. The board appointed Steiner on May 27, 2014.

The recent record is steadier. State Fund moved to an outcomes-based medical provider network, the State Fund MPN by Harbor Health, in 2016. By 2021 it had cut opioid prescriptions 82% from 2014 levels. It launched BindNow, an instant quote-and-bind tool for brokers, in 2022. In 2024 it introduced pricing that weighs each employer's own risk characteristics more heavily than its job classifications. In 2025 it declared a policyholder dividend for the seventh consecutive year.

Business insurance products

State Fund writes only California workers' compensation and employers' liability. It does not sell general liability, property, commercial auto or a business owner's policy, so the rest of the account goes to another carrier.

• Standard policies. Priced on California classifications and your experience modification rate, then adjusted by schedule rating. State Fund's schedule rating looks at how your operations compare with the classification, management practices (hiring, turnover, premium payment history, claim reporting, return-to-work) and safety practices, including how well your Injury and Illness Prevention Program actually works.
• Billing plans. Minimum-premium policies are paid in full up front. Stipulated billing takes a down payment and then monthly installments. A monthly "Pay Based on Payroll" plan ties premium to actual payroll, similar to pay-as-you-go workers' comp: how it works and who it suits. Temporary staffing agencies, PEOs and farm labor contractors must use it.
• Alternative dispute resolution (carve-out) policies. For union employers whose collective bargaining agreements include a labor-management carve-out, an ombudsperson, mediation and arbitration replace litigation. The employer gets two policies, one for union employees under the ADR program and a standard one for everyone else.
• Dividends. For 2025 State Fund declared a 20% regular dividend, about $200 million for policies incepting in 2025, plus $8 million of large-account safety dividends. It says it has declared about $830 million in dividends over seven years. Dividends are not guaranteed.
• Safety grants and training. Safety Equipment Grants, launched in late 2023, have paid more than $10 million to more than 1,600 policyholders for fall-protection gear. It also offers an online Safety University and an online Injury and Illness Prevention Program builder.

Who it insures

Any California employer, by design. State Fund's broker guidelines route submissions by standard premium. Accounts under $50,000 are treated as small commercial and reviewed after binding. Accounts from $50,000 to $499,999 go to a middle-market underwriter. Accounts of $500,000 and up need five years of loss runs and payroll history, current and prospective WCIRB experience rating worksheets and possibly a loss-prevention inspection before a quote.

As the open-door market, State Fund is where many hard-to-place California employers end up (see assigned risk and residual markets for workers' comp). It also competes for preferred accounts with dividends and schedule credits. The hard limit is geography. State Fund covers California employment only, so an employer with staff in other states needs a plan for those workers; see employees in several states: other-states coverage and multistate workers' comp.

How to buy

Buy direct or through a broker. Direct buyers can start with State Fund's online Easy Quote or call 888-782-8338. Brokers submit through State Fund Online and can bind many policies instantly through BindNow. For an accurate quote, have ready the legal business name, tax ID, WCIRB number, payroll and employee counts by location and classification, a description of operations, licensing, ownership and officer exclusion details, and at least four years of loss runs valued within 100 days of the proposed start date.

State Fund Online handles payroll reports, payments and claims management. Policyholders who bought direct can create certificates of insurance there. Each certificate names one holder and typically takes a day to process; broker-placed accounts get certificates from the broker. Every policy ends with a final bill based on reported payroll or a premium audit, which can produce a credit or an amount due.

Claims

Employers can report an injury online through State Fund Online at any hour. You can also call 888-782-8338 on weekdays from 8 a.m. to 5 p.m., where staff complete the report with you and assign a claim number on the spot. A third option is to fax the claim form (3301) and the Employer's Report of Occupational Injury or Illness (Form 3067) to 800-371-5905. State Fund reminds employers that Form 3067 is due within five days after an injury is known, and Cal/OSHA must be told within eight hours of a serious injury or death; see reporting a workplace injury: what employers must do.

Injured workers are treated through the State Fund MPN. Medical access assistants at the same number help them find network doctors and book appointments Monday through Saturday, 7 a.m. to 8 p.m. It released more than $617 million of loss and loss adjustment reserves that year and more than $3 billion over eight years. Policy disputes can go to its Customer Assistance Program.

Financial strength and ratings

State Fund does not cite a financial strength rating from AM Best, S&P, Moody's or Fitch on its website or in its 2025 financial summary. That can matter when a contract requires an AM Best-rated carrier, so check before you sign.

Its 2025 statutory results:

• Net premiums earned of $956 million, down 12% after a 7.9% rate cut effective December 2024.
• A combined ratio of 87.4%, compared with 89.5% in 2024.
• Net investment income of $644 million.
• Net income of $513 million after $189 million of policyholder dividends.
• Policyholders' surplus of $8.05 billion and admitted assets of $20.34 billion at December 31, 2025.

Surplus exceeded California's risk-based capital minimum, the fund passed all NAIC IRIS tests, and 88% of its bonds carried the NAIC's top credit grade.

Strengths and weaknesses

State Fund is the comp market every California employer can turn to, backed by a large surplus and a habit of paying dividends. What it cannot do is cover anything beyond California workers' comp, and it carries no published rating.

• Strengths: An open door for any California employer, including startups and accounts private carriers decline. A strong balance sheet: $8.05 billion of surplus and an 87.4% combined ratio in 2025. Dividends declared for seven straight years, plus safety grants and online safety training. Direct and broker buying, instant binding for small accounts and a carve-out ADR program for union employers.
• Weaknesses: Workers' comp only, California only, so you need another carrier for liability, property and auto and possibly for out-of-state staff. No AM Best or other agency rating, which can clash with contract requirements. Phone claim reporting runs only on weekday business hours. Its role swings with California's comp cycle (53% of the market in 2003, under 20% by 2010), and its governance is set by the Legislature.

How to contact State Fund