Calif. Workers’ Comp Insurance Rating Bureau: Premium Rates Declining

The Workers Compensation Insurance Rating Bureau of California has completed its report summarizing insurer loss and premium experience through June 30, 2007.

According to the report, California written premium reported for the first six months of 207 is estimated at $6.9 billion, approximately 23 percent below the written premium reported for the first two quarters of 2006. The average statewide insrer rate per $100 of payroll for policies written for the first six months of 2007 is $2.92. That figure is 22 percent below the average rate charged for the first six months of 2006, and 55 percent below the average rate charged in the second six months of 2003.

WCIRB projected statewide ultimate accident year losses for 2006 of $6.1 billion, consistent with the level projected for accident year 2005, but 50 percent less than the ultimate losses projected for accident year 2002, before workers’ compensation legislative reforms were implemented.

The group projected an ultimate accident year loss ratio of 35 percent for accident year 2006. “This loss ratio, while still very low compared to historical norms, represents a seven percentage point increase from the estimated accident year 2005 loss ratio. This increase is primarily the result of declining premium rates,” it said.

WCIRB estimated that indemnity claim frequency for the first half of 2007 would be 7.6 percent lower than for the first half of 2006, and estimated that hte average cost of a 2006 indemnity claim would be approximately $40,000. “This preliminary severity estimate, which is below the pre-reform level but above the 2005 estimate, may change over time as the loss information matures,” the report indicated. BOth indemnity and medical average costs per claim showed increases in 2006.

For more information, visit www.wcirbonline.org.

Source: WCIRB