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Workers' Compensation Claims Liabilities | 9 Months Ended
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Sep. 30, 2025
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Workers' Compensation Claims Liabilities | Note 3 – Workers’ Compensation Claims Liabilities The following table summarizes the aggregate workers’ compensation reserve activity (in thousands):
| Three Months Ended |  |  | Nine Months Ended |
| September 30, |  |  | September 30, |
| 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Beginning balance |  |  |  |  |  |  |  |  |  |  |
Workers' compensation claims liabilities | $ | 113,902 |  |  | $ | 149,630 |  |  | $ | 128,446 |  |  | $ | 167,763 |
Add: claims expense incurred |  |  |  |  |  |  |  |  |  |  |
Current period |  | 3,232 |  |  |  | 2,358 |  |  |  | 9,257 |  |  |  | 9,657 |
Prior periods |  | (1,137 | ) |  |  | (4,272 | ) |  |  | (8,141 | ) |  |  | (9,094 | )
Total claims expense incurred |  | 2,095 |  |  |  | (1,914 | ) |  |  | 1,116 |  |  |  | 563 |
Less: claim payments related to |  |  |  |  |  |  |  |  |  |  |
Current period |  | 1,644 |  |  |  | 1,063 |  |  |  | 4,001 |  |  |  | 3,582 |
Prior periods |  | 5,159 |  |  |  | 9,493 |  |  |  | 16,272 |  |  |  | 27,716 |
Total claim payments |  | 6,803 |  |  |  | 10,556 |  |  |  | 20,273 |  |  |  | 31,298 |
Change in claims incurred in excess of retention limits |  | (10 | ) |  |  | (357 | ) |  |  | (105 | ) |  |  | (225 | )
Ending balance |  |  |  |  |  |  |  |  |  |  |
Workers' compensation claims liabilities | $ | 109,184 |  |  | $ | 136,803 |  |  | $ | 109,184 |  |  | $ | 136,803 |
Insured program The Company provides workers’ compensation coverage for client employees primarily through arrangements with fully licensed, third-party insurers (the “insured program”). Under this program, carriers issue policies or afford coverage to the Company’s clients under a program maintained by the Company. Approximately 86% of the Company’s workers’ compensation exposure is covered through the insured program. Effective July 1, 2021, the Company entered into a fully insured arrangement for its insured program, whereby third-party insurers assume substantially all risk of loss for claims incurred under the program. This fully insured arrangement has been extended annually and covers claims incurred between July 1, 2021 and June 30, 2026. Each annual fully insured policy allows BBSI to participate in savings if claims develop favorably up to a maximum per policy year ranging from $20.0 million to $30.0 million, depending on the policy period. For the policy period from July 1, 2021 to June 30 2022, BBSI can incur additional premiums up to $7.5 million if claims develop adversely. For all other policy years, no additional premiums can be charged based on claim performance. Premiums incurred but not paid are recorded as either current or long-term premium payable on the condensed consolidated balance sheets based on the expected timing of the payments. For claims incurred under the insured program prior to July 1, 2021, the Company retains risk of loss up to the first $3.0 million per occurrence on policies issued after June 30, 2020 and $5.0 million per occurrence on policies issued before that date. Claim obligations for policies issued under the insured program between February 1, 2014 and June 30, 2018 were removed through loss portfolio transfers in 2020 and 2021. The following is a summary of the risk retained by the Company under its insured program after considering the effects of the loss portfolio transfers and current insurance arrangements:
Year | Claims risk retained
2014 | No
2015 | No
2016 | No
2017 | No
2018 (1) | No
2019 (1) | Yes
2020 | Yes
2021 - Through June 30 | Yes
2021 - July 1 and after | No
2022 | No
2023 | No
2024 | No
2025 | No
(1) The loss portfolio transfers excluded approximately 10% of claims from 2018 and included an approximately offsetting amount of claims from 2019. The Company is required to maintain minimum collateral levels for certain policies issued under the insured program, which is held in a trust account (the “trust account”). The balance in the trust account was $159.9 million and $197.1 million at September 30, 2025 and December 31, 2024, respectively. The trust account balance is included as a component of the current and long-term restricted cash and investments in the Company’s condensed consolidated balance sheets. Self-insured programs The Company is a self-insured employer with respect to workers' compensation coverage for all employees, including employees of PEO clients that elect to participate in our workers’ compensation program, working in Colorado, Maryland, Ohio, and Oregon. In the state of Washington, state law allows only the Company's staffing services and internal management employees to be covered under the Company's self-insured workers' compensation program. The Company also operates a wholly owned, fully licensed insurance company, Ecole, which provides workers’ compensation coverage to client employees working in Arizona and Utah. Approximately 14% of the Company’s workers’ compensation exposure is covered through self-insurance or Ecole (the “self-insured programs”). For all claims incurred under the Company’s self-insured programs, the Company retains risk of loss up to the first $3.0 million per occurrence, except in Maryland and Colorado, where the Company’s retention per occurrence is $1.0 million and $2.0 million, respectively. For claims incurred under the Company’s self-insured programs prior to July 1, 2020, the Company retains risk of loss up to the first $5.0 million per occurrence, except in Maryland and Colorado, where the retention per occurrence is $1.0 million and $2.0 million, respectively. The states of California, Maryland, Oregon, Washington, Colorado and Delaware required the Company to maintain collateral totaling $52.1 million and $55.9 million at September 30, 2025 and December 31, 2024, respectively, to cover potential workers’ compensation claims losses related to the Company’s current and former status as a self-insured employer. At September 30, 2025, the Company provided surety bonds totaling $52.1 million. Claims liabilities The Company provided a total of $109.2 million and $128.4 million at September 30, 2025 and December 31, 2024, respectively, as an estimated future liability for unsettled workers' compensation claims liabilities. Of this amount, $5.9 million and $6.0 million at September 30, 2025 and December 31, 2024, respectively, represent case reserves and IBNR in excess of the Company’s retention. The accrual for costs incurred in excess of retention is offset by a receivable from insurance carriers of $5.9 million and $6.0 million at September 30, 2025 and December 31, 2024, respectively, which is included in other assets in the condensed consolidated balance sheets.

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