The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its new “WCIRB Report on the State of the California Workers’ Compensation Insurance System.”
The report, which the WCIRB plans to update annually, summarizes the cost of workers’ compensation insurance based on premiums paid by insured employers, shows how premium dollars are distributed among various system components, and identifies key cost drivers such as frequency and the average cost of claims. The report also contains a brief summary of how post-Senate Bill No. 863 (2012) costs are emerging compared to initial projections.
Highlights of the report:
- Workers’ compensation premiums over the last several years have grown steadily, increasing 16 percent from 2011 to 2012 and 18 percent from 2012 to 2013.
- California premium now comprises approximately one-fourth of countrywide workers’ compensation premium.
- By far, the largest contributing factor to premium increases over the last couple of years has been increases in the rates charged by insurers, although payroll growth has also contributed. However, current rates on average are not significantly different from rates charged in the late 1970s, as increases in employer insured payrolls combined with a steady long-term decline in the frequency of claims have largely offset rising medical costs.
- Typically, rates charged in California have been markedly higher than rates charged in other states.
- The average advisory pure premium rates for the clerical and information and professional services sectors are far below the all industry average, while the average rates for the construction and transportation and utilities sectors are far above.
- Injured worker indemnity and medical benefits comprised almost two-thirds (66 percent) of all 2013 system costs as compared to 60 percent in 2009.
- Temporary disability and permanent partial disability benefits comprise the vast majority of indemnity benefits (approximately 90 percent).
- After many years of decline, the frequency of indemnity claims has been increasing over the last few years.
- Allocated loss adjustment expenses per claim increased by 7 percent in 2013, compared to 2012.
- Combined ratios, while improving, have exceeded 100 percent since 2007, and are above the countrywide average. The 2013 ratio is 101 percent.
The WCIRB will conduct a live webinar from 11 am to Noon PT on August 7 to discuss the report and attendees will have an opportunity to submit questions directly to the report’s authors. The webinar is open to the public and a recording of the webinar will be posted to the WCIRB website for those who cannot attend the live presentation. Register here.
