Return of Excess Surplus (aka “Dividends”)
Workers’ Compensation self-insured groups are non-profit organizations of employers sharing responsibility for the cumulative cost of claims. When the CRMBC successfully controls costs, it may develop excess surplus that can be returned to members. This return of excess is a key objective of the CRMBC, and is achieved through aggressive cost containment and claims management. The CRMBC Board policy determines when and how money is returned, and California has its own regulations concerning return of excess. In all cases, a certified actuary performs a study of the loss experience of the group, adds additional reserves for predicted future claims costs, and establishes the available surplus.
| The term “dividends” is often used to describe the return of excess surplus from self-insured groups. This is incorrect because the term "dividends" is associated with for-profit companies, while self-insured groups are non-profit entities. "Return of excess surplus" is a more accurate term. |
Workers’ Compensation claims sometimes remain open, accumulating expense over many years, so the CRMBC must consider this when planning. While individual members of CRMBC may look at their own positive claims experience in hopes of seeing a return of excess, it is really the experience of the entire group that is the basis for any return. Some members may have high losses during that same year and the group as a whole must absorb these costs. Insurance companies and self-insured groups do share this feature: the experience of good performers makes up for the experience of poor performers in any given year.
While the CRMBC has had funds available for Return of Excess in each year since its launch in 2005, an impending increase in required reserves has sometimes redirected those funds for that purpose. However, to date the CRMBC has returned millions of dollars in excess surplus to its membership.
