The State Compensation Insurance Fund (SCIF) informed its workforce today that it will be implementing layoffs in 2012 to bring down its cost structure faster than previously planned. The quasi-governmental carrier is taking steps to cut its workforce by up to 1,800 positions. The move equates to 25% of its workforce.

The carrier is running an expense ratio of 90% that is out of line with the rest of the industry, which it says averages closer to 40%. At this level State Fund notes that it pays out more to operate the company than it does to pay benefits for injured workers.

State Fund's payroll has been shrinking in recent years from a high of 9,300 and more was expected to come from its relocation plan. But the changes weren't enough to bring it in line with industry standards, says management.

"[It was a] combination of comparing ourselves to others in the industry as well as our own internal reviews that looked at how technology and redesigned business processes have affected the need for staff," says State Fund spokeswoman Jennifer Vargen tells Workers' Comp Executive of the process used to arrive at the total cuts.

According to the carrier the 1,500 to 1,800 positions will be eliminated in May or June of 2012. It says the cuts will produce annual savings of $150 million. An additional $200 million in annual savings is expected to come from its previously announced geographic restructuring plan.

Stay tuned for additional coverage.

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(Filed by Brad Cain in San Francisco)