California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) Summary report of Insurer Experience covering accident year figures for 2005 show that loss ratios are at 34 percent.
According to the report, that figure is up a percentage point from accident year 2004, but is a negligible change. The data from insurers show a competitive and profitable California workers’ comp market, thanks in large part to the workers’ comp reforms. The calendar year combined ratio for 2005 is the lowest it’s been in years at 80 percent.
According to WCIRB, California written premium for 2005 is $21 billion, approximately 11 percent below the written premium for 2004. The average statewide insurer rate per $100 of payroll for policies written in the second half of 2005 is $4.53. That is more than 15 percent below the rates charged in the first six months of 2005, and approximately 30 percent below the average rate charged for the second six months of 2003.
After reflecting on the impact of workers’ compensation legislation on upaid losses, ultimate accident year losses for 2005 are projected to be $7.1 billion, representing a decrease in estimated losses of approximately 8 percent from the ultimate losses projected for accident year 2004, and approximately 42 percent from the ultimate losses projected for accident year 2002.
WCIRB’s study also projected ultimate accident year losses of 139 percent, 123 percent, 106 percent, 83 percent, 53 percent, 33 percent and 34 percent, for the 1999 through 2005 accident years. The ultimate accident year 2005 combined loss and expense ratio is estimated to be 58 percent.
Claim frequency also continued its downward trend. Indemnity claim frequency for accident year 2005 is estimated to be 18 percent lower than that for 2004. It is estimated at less than 40 percent of its all-time high in 1991. WCIRB projected the average cost of a 2005 indemnity claim will be approximately $43,000. That severity, while approximately 10 percent more than the estimated average cost of a 2004 indemnity claim, is still 11 percent less than the average cost of a 2002 claim. Both indemnity and medical average costs per claim increased in 2005.
A copy of the WCIRB report can be found on its website at: http://wcirbonline.org/wcirb_wire/pdf/2006/053112_insurer_exp_report.pdf.
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