Mulryan Named Chair of Calif. State Fund

The California State Compensation Insurance Fund is likely to face challenges of medical cost increases and the risk of eroding workers’ compensation reforms in the next year. Yet outgoing board chairwoman Jeanne Cain believes the State Fund is in good hands to weather any changes.

“The structure is in place for the Fund to move to the next level,” she said, reflecting on her accomplishments. Newly appointed board chairman Lawrence Mulryan should add to the continuity in leadership, she said.

Cain is credited with putting the workers’ comp insurer on a new course. During her tenure from 2004 to 2010, the board commissioned an internal review of the organization that:

• Established an auditable whistleblower hotline;
• Reorganized the board and strengthened the internal audit function that reports to State Fund’s president;
• Placed accounting, finance, financial reporting and internal control functions under the direction of a permanent chief financial officer;
• Improved governance documentation to ensure policies and lines of authority are clearly delineated;
• Handed over the results of an internal investigation to the California Highway Patrol and the San Francisco District Attorney’s Office. The investigation is ongoing;
• Changed the investment policy, to help the insurer weather fluctuations in the workers’ comp industry;
• Completed the majority of the 145 areas that the California Department of Insurance’s operational audit indicated needed remediation; and
• Expanded the board from five to 11 voting members.

These changes have resulted in a “more open, more accountable and more collaborative operation,” Cain said. She recalled that when she was appointed in 2004, the Fund had gone through tremendous growth with limited resources.

“(It) was a priority was to create an effective board to ensure it had the focus to make sure that operations met the highest standards for business practices, and is transparent,” she said. She believes under her guidance, State Fund has made “significant strides toward transformative change and sound corporate governance.”

Cain’s replacement, Mulryan, agrees with that assessment, and expects a smooth transition in leadership.

Former Gov. Arnold Schwarzenegger appointed Mulryan chairman of the board to replace Cain, whose term had expired. Mulryan was interim president and CEO of State Fund in 2007, and also was the former executive director of the California Insurance Guarantee Association.

“I do have direct experience in leading State Fund, which gives me a little leg up in being well-versed in the vision of State Fund, in knowing the issues, knowing the company, knowing a lot of the people, and having served the organization at the beginning of its transition period,” he said.

Although State Fund’s combined ratio is currently 166 percent, Mulryan believes his organization has the building blocks to weather workers’ comp’s cyclical markets.

“Underlying expenses are increasing; we do think that will be a challenge for the entire workers’ comp industry and employers. … We want to bring expenses down and reduce losses.”

He noted, however, that State Fund’s loss ratio can’t be compared to the private sector because the organization is monoline, and must offer coverage, no matter what the market does.

“Our mission is to be a market for all workers’ compensation in California, and to do it efficiently and effectively,” Mulryan said. Priorities under his leadership may be slightly different than under Cain’s. The current leadership is pursuing a fair pricing approach; wants to speed the process of training underwriting and deploying new rate filings; and to reduce expenses with automation and consolidation of offices. Nevertheless, State Fund is still headed in the same direction — “on a course for long-term stability and continued success,” Mulryan concluded.

Topics California Workers' Compensation