State Compensation Insurance Fund has announced it has decided to not move forward with the plans for the construction of a new office building adjacent to its headquarters at 1275 Market Street in San Francisco.
When the new building was planned, State Fund was experiencing unprecedented growth due to the most dramatic marketplace contraction in the 91-year history of California’s workers’ compensation system. Many insurance carriers withdrew from the market while others became insolvent. As a result, thousands of employers turned to State Fund to obtain mandatory workers’ compensation coverage.
Recent workers’ compensation reform legislation, particularly SB 899 signed by Governor Schwarzenegger in 2004, has resulted in many carriers returning to California. These positive market developments have eliminated the need to increase staff in the San Francisco Home Office.
In response to these changes, State Fund’s Board of Directors decided that the construction of a new building in San Francisco for State Fund’s use should not proceed. The Board also cited increased construction and steel costs as factors.
“This move reflects our commitment to make decisions that serve the best interests of the organization, our policyholders and their injured workers, and the California economy,” said State Fund Board Chair Jeanne Cain. “The fact that the new building is no longer needed in San Francisco underscores that one of the central goals of last year’s reform legislation — reducing costs and bringing carriers back into the California market — has been successful.”
State Fund’s Acting President James C. Tudor added, “State Fund’s mission is to serve California’s employers as cost-effectively as possible. State Fund is financially strong and to remain so, we will continue to monitor all costs and expend our capital wisely.”
The decision not to move forward with the construction of a new building is one of several Board supported management measures that have contributed to reduced costs for California employers. State Fund recently announced a 14 percent average rate reduction. With this rate filing — effective July 1 — State Fund has reduced average rates a cumulative 26.2 percent since January 2004.
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