State Compensation Insurance Fund Arrives in Hacienda

By Scott Eldredge, Hacienda Network Staff Writer

Two District Offices and Several Business Units Relocating to Three Buildings

State Compensation Insurance Fund is moving its Oakland and San Francisco district offices and a number of business units into Hacienda at 5860, 5880, and 5890 Owens Drive. The three facilities total more than 320,000 square feet and will serve more than 800 employees by the time the move is completed in the second quarter of 2007.

Besides the two district offices, State Fund functions that are relocating to Pleasanton include credit and collections, insurance services such as payroll, billing, and policy support; a group program now located in Walnut Creek, and IT services.

State Compensation Insurance Fund was created by the California legislature in 1913 when the state created a no-fault worker's compensation insurance system and mandated that all employers provide coverage for their employees. State Fund opened for business in San Francisco in 1914, charged with providing coverage at cost and remaining self supporting, which it has done for 92 years.

While State Fund is a state agency, and its employees are state employees, it competes with private insurance carriers in the California market and is subject to the same guidelines as the private companies, with one important difference.

"If an employer cannot get coverage through another carrier, for whatever reason," explains Julie Jenkinson, State Fund communications manager, "because of the type of business they are, or maybe they're a new business, or the risk is not particularly attractive to another carrier, they can come to us, and we will provide them a quote. Unlike other carriers, we cannot turn businesses away because they are a difficult risk."

Being forced to quote everyone might not seem like a level playing field in the insurance business, but Jenkinson doesn't see it that way, because State Fund doesn't compete in the same way. "We really look at our purpose, our unique mission, as being an available market for California employers. Unlike most private carriers who have stockholders, we are not primarily driven by the profit motive. Our reason for being is to make sure that all the employers in California can obtain coverage."

State Fund sells through brokers and also directly. It is the largest compensation insurance carrier in the state, and typically the first or second largest in the nation. Historically it usually has 20 to 25 percent of the market, with the rest insured by 200 to 300 other carriers. In recent years the percentage has been as high as 50 percent because in the 90s, out-of-control worker's compensation costs drove a number of companies out of business or out of state. Successful reforms in the last 5 years have brought costs under control and brought back the competition, and with it a healthier split in the market share. It is not the State Fund's goal to dominate the market; by making insurance available to all employers, it provides a stabilizing influence.

State Fund employs more than 10,000 people in total in California, spread among 25 offices in 18 districts. Its headquarters remains in San Francisco.

Photo: State Compensation Insurance Fund is beginning to occupy these three buildings, opposite Hacienda's BART station on Owens Drive.

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