Title: Executive Director, California Insurance Guarantee Association
Resume: Wilson joined the California Insurance Guarantee Association at the end of June 2006, taking over leadership of the organization on August 15, 2006. Prior to joining the association, Wilson served for eight years as vice president of legislative and regulatory affairs for Farmers Insurance Group. His prior experience also includes the private practice of law, with a focus on civil litigation and tenure as a law clerk to the Nevada Supreme Court.
Schools: Stanford University, University of California at Los Angeles, California Western School of Law
Boards and Commissions: Wilson is a member of the California State Bar, the Nevada State Bar, the United States Ninth Circuit Court of Appeals, all federal District Courts in the states of California and Nevada, and the American Bar Association.
“Insanity: doing the same thing over and over again and expecting different results.” (Albert Einstein)
Wilson stepped to the fore three years ago to lead CIGA after serving for years as a board member. Wilson brought with him a wealth of industry experience, including nearly 10 years as vice president of legislative and regulatory affairs for Farmers Insurance Group. As the head of CIGA, Wilson has had to lead the way on policy, especially as it pertains to paying the claims of defunct carriers and getting money from estates to pare down the debt left over from the carrier carnage in the late 1990s. Two years ago he was confronted with a rash of administrative and organization problems within CIGA, particularly how much CIGA was paying for services. Wilson helped lead the way in reforming internal systems. CIGA was also confronted with its lack of transparency resulting in legislation subjecting CIGA to Bagley-Keene and the California Public Records Act.
What are the top three issues in California workers’ comp today?
Rate adequacy: not necessarily the industry as a whole, but certain corporations won’t get enough premium to pay claims, and if they don’t collect enough money, we have to pick up their claims. Appropriateness of reserves: R.A.N.D. study talks about companies with low reserves. Ballooning medical costs.
Are we headed for a hard market, and if so, when will it come? How long should we expect it to last? What are the repercussions? We are in for a hardening market. Declining premium is over. We hit rock bottom in 2009. How fast will they go up?
That is an open question. It’s a declining universe of insurers. I’m not on the marketing side. We are conservative, so we’d guess that premiums will go up 5%. Saying any higher would just give us a false sense of hope. It depends on how hard, how fast. No reforms most likely. The Legislature isn’t going to cut benefits. It’s the administrators that need to rework the schedule, but they haven’t yet.
It’s no longer a question of if but when we enter a hard market, so what is in the future of State Compensation Insurance Fund? Will its market share climb back to historic levels? Do you think that further reforms are needed for the governance of State Fund? For example, does it make sense to have Senate confirmation for board members?
The R.A.N.D. study has shown that State Fund is engaging in certain marketing strategies. This is all dealing with the insolvency issues. If they were an aggressive competitor, their market share would go up. They aren’t really an aggressive competitor, but I’m not involved too much with marketing issues so I can’t really say.
Are medical provider networks a help or a hindrance? How should they be improved?
It is certainly a help. There is always room for improvement. It is difficult to get an adequate number of providers so that could be improved.
How should utilization review be improved?
Individual entities can streamline issues by themselves rather than sending every issue through an extended process that will yield the same result.
What do you see, other than medical, as the next big cost driver?
For us it would definitely be medical, so that’s a good question. I guess it would be benefit changes, at least for operating companies.
Is it realistic to deal for more cost-cutting reforms in exchange for increasing PD benefits?
It’s reasonable. There are a number of practical legislative restrictions in place. These changes may change as parties change and as we move forward.
Where do you see applicant attorneys focusing litigation in the future?
I don’t really have a real answer. They are always trying to unlock the benefit structure, which usually ends up going bad. We can see this in the Guzman and Ogilvie circumstances.
Now that the federal health care bill has become law, what impact, if any, do you see that having on workers’ comp and do you have any concerns?
We deal with old claims, so I don’t really have an answer. But Medicare has changed. And when they create savings to pay for health insurance, it’s like their pocket is getting picked.
What is the effect of more than $1 billion in payroll being absorbed by self-insured groups?
Selfishly, we will get a lot less support. It just means there is $1 billion less premium for us. The problem lies in the fact that one guy could be tagged for payment of all of them. If these groups start having similar problems, then business failure is problem. I know for me personally, I’d be scared to be an agent or broker at a time like this.
Governor Schwarzenegger signed bills allowing predesignation to continue (SB 186), tweaking utilization review (AB 361), and limiting the denial of benefits (AB 1093). There are also several bills moving through the Legislature that would extend benefits for specific occupational groups. What impact could these, if any, have on costs?
Our claims have been around for a long time, so there really isn’t a change in costs. Personally, I don’t face that issue, but limiting the denial of benefits will always lead to problems. These problems aren’t necessarily significant, but they are problems nonetheless.
Are loss adjustment expenses leveling out or are they still climbing? What is the cause
Loss adjustment expense is level but different from an operating company, for instance, because we deal with old claims, not just the “slips and falls” of everyday workers’ comp. We deal with big-dollar, significantly injured people. Just to give you an idea of how long term these claims are, they range from 1939 to 2003.
Is medical severity going to continue to climb or is it just a blip?
It’s going up. The fact of the matter is that nowadays doctors prescribe medication for everything. Now this may be different with a company with a normal book of business, but for the most part I feel that it’s not just a blip.
Are there any changes to claims frequency?
I haven’t looked at data recently. We have old claims. But most likely claims frequency has gone down or stabilized.