The largest cuts are expected to come at the agency's Pleasanton headquarters where 256 jobs will be trimmed. Most of those are office and clerical personnel.
The agency, which once carried more than half of Workers Compensation policies in California, carries only about 15% now. State Fund, as the agency is called, is a government-approved agency but receives its funding from the insurance premiums it sells, not taxpayers.
It hasn't been able to trim expenses as fast as it's seen its share of the market decline, prompting the major cutbacks.
According to reports, State Fund's market share at its peak was about $8 billion in yearly workers' comp premiums.
Created by the Legislature in 1914, State Fund saw its premiums soar after severe under-pricing created a shakeout in the workers compensation insurance business. By 2003, 28 private carriers either had gone insolvent or had stopped writing workers compensation policies in California.
Gov. Arnold Schwarzenegger initiated reforms in the system to attract more carriers and reduce employer costs, causing State Fund's market share to start dropping.
A bright note for the Pleasanton headquarters is that some of the outlying jobs may be moved here in the coming months. A claims office staff now in Santa Rosa will move to Pleasanton by the third quarter of the year, State Fund reported.