California Workers’ Comp Report Shows Written Premium Down 6% in 2019

April 23, 2020

Workers’ compensation written premium in California for calendar year 2019 was 6% below that for calendar year 2018, according to an update on California statewide insurer experience valued as of Dec.31, 2019.

The Workers’ Compensation Insurance Rating Bureau of California has released its quarterly experience report on Thursday, which calls attention to the pending impact of the COVID-19 crisis.

“The impact of the COVID-19 crisis on the California economy is expected to significantly reduce employer payroll and insurer premium in 2020,” the WCIRB report states.

The report shows the average charged rate for 2019 was 12% below that for 2018 and 33% below the peak in 2014.

The WCIRB projects the accident year combined ratio for 2019 to be six points above that for accident year 2018, primarily driven by lower premium rates.

The decreases have been primarily driven by decreases in insurer charged rates more than offsetting increases in employer payroll, according to the report.

It shows the Jan. 1, 2020 approved advisory pure premium rates are on average 47% below those for Jan. 1, 2015.

Other highlights of the report include:

  • The projected combined ratio for 2019 is 6 points higher than 2018 and 14 points higher than the low point in 2016 as premium levels have lowered while average claim severities increased moderately.
  • Despite the recent increase, combined ratios for 2012 through 2019 are each below 100% and are the lowest since the 2003 through 2007 period.
  • Indemnity claims have settled quicker over the last several years, largely driven by SB 863 and SB 1160 reforms.
  • Claim activity is expected to slow down by the end of the first quarter of 2020 and continue into the second quarter as a result of the COVID-19 crisis.

“The impact of the COVID19 crisis on claim frequency is not yet clear,” the report states. “Although some claims arising from exposure to the virus are being filed, the slowdown in economic activity may otherwise reduce claim filings.”

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

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