Largest workers’ compensation insurance company in California to lay off 1,800 by next June

State Fund Insurance San Francisco Home OfficeThe State Compensation Insurance Fund, a government-controlled insurer which is the largest workers’ compensation insurance company in California, has announced that one of its efforts to cut expenses and streamline its operations will be to lay off approximately one quarter of its total 6,800 employees.

Chief executive of State Compensation Insurance Fund, Tom Rowe, said that as many as 1,800 civic service workers will be eliminated by the end of June 2012, as the company has been determined to be overstaffed by about 30 percent.

This is the first time that this San Francisco-based company has performed a mass layoff since the 1930s. It is expected that the savings from these layoffs at State Fund will be worth approximately $350 million per year.

Rowe sent an email to the entire company which explained that the reason the jobs are being ended is that “business processes have changed significantly enough that work has been substantially reduced.” The email added that more time is being spent in the operation of the business than is dedicated to providing benefits to those who are injured.

The California Legislature originally created the company 97 years ago in order to provide last-resort insurance to employers who are not capable of obtaining the necessary workers’ compensation coverage from a private insurance company. In 2010, $1 billion were collected by State Fund from approximately 150,000 workers.

Though State Fund operates as an independent business, it is staffed by government employees. That said, it doesn’t rely on state treasury funding. Its board of directors is made up of primarily governor appointed members.

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