Written premium for 2020 was 13% below the previous year, and was at the lowest since 2012, a new report out on Thursday shows.
The Workers’ Compensation Rating Bureau of California Quarterly Experience Report, which is as of Dec. 31, 2020, portrays the far-reaching effects of the pandemic on the state’s workforce, employers and workers’ comp insurers.
“Continued decreases in average insurer charged rates are driving the 2020 premium decrease as 2020 payroll levels were relatively consistent with 2019,” the WCIRB report states.
The average industry charged rate for 2020 was 9% below 2019 and 40% below the peak in 2014.
The WCIRB’s proposed Sept. 1, 2021 advisory pure premium rates are on average 2.7% above the approved Jan. 1, 2021 rates, which exclude the cost of COVID-19 claims, and 2.0% below the approved Jan. 1, 2020 rates.
There have been 10 straight pure premium rate decreases totaling roughly 50%, according to the WCIRB.
Other findings in the report include:
- The preliminary projected loss ratio for 2020, including COVID-19 claims, is 5 points above 2019.
- Excluding COVID-19 claims reduces the projected loss ratio for 2020 by roughly 4 points.
- Projected loss development for accident year 2020 is preliminary in that the projected development for COVID-19 claims and non- COVID-19 claims in 2020 may differ from a more typical accident year.
- The preliminary projected combined ratio for 2020, including COVID-19 claims, is 7 points higher than 2019 and 23 points higher than the low point in 2016.
- Excluding COVID-19 claims, the projected combined ratio for 2020 is 96% which is more comparable to the 2019 ratio.
The report also shows that indemnity claims were settling quicker through 2019 thanks or worker’s comp reforms.
“Average claim closing rates declined sharply beginning in the second quarter of 2020 as a result of the pandemic and have continued to decline for the remainder of the year,” the report states.
- California Workers’ Comp Written Premium Down 12% over 9 Months of 2020
- California OKs Workers’ Comp Advisory Rates, No Virus Adjustment for Now
- Workers’ Comp Should See Profit This Year But Maybe Not in 2021: Fitch
Was this article valuable?
Here are more articles you may enjoy.