Workers’ Comp Written Premium in California Fell Slightly in 2017

April 13, 2018

Written premium in California workers’ compensation fell slightly last year, the first time that’s happened in seven years, according to a new report out.

The Workers’ Compensation Insurance Rating Bureau released its quarterly experience report on Friday. The report is based on statewide workers’ comp insurer loss and premium experience through Dec. 31, 2017.

The major findings of the report include:

  • California written premium for 2017 was 2 percent below that for 2016. That is the first decrease in seven years.
  • The projected industry average charged rate per $100 of payroll for policies incepting in 2017 is $2.46, which is 10 percent below that for 2016 and 17 percent below the peak in 2015.
  • The WCIRB projects an ultimate accident year combined loss and expense ratio of 92 percent for 2017. This projection is 5 points higher than that for 2016 as premium levels have lowered while average claim severities increased moderately.
  • Indemnity claims continue to settle quicker, and the ratio of claim closure for 2017 represents a 17-year high.
  • The WCIRB projects indemnity claim frequency for accident year 2016 to be 3 percent below the frequency for 2015. However, claim frequency for 2017 shows a modest increase (1 percent) similar to other recent years.
  • The WCIRB projects the average cost (or “severity”) of a 2016 indemnity claim to be approximately $77,000, which is 4 percent higher than the projected severity for 2016 following several years of relatively flat severities.
  • Average pharmaceutical costs per claim for the first three quarters of 2017 are 70 percent below the levels from 2012. This is prior to the impact of the new drug formulary effective in 2018, which is expected to further reduce pharmaceutical costs.
  • The average number of liens filed in 2017 is 40 percent below the averages experienced shortly prior to the implementation of the SB 1160 and AB 1244 reforms impacting lien filings.

The full report is available in the research section of the WCIRB website.

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