California Workers’ Comp Reforms Continuing to Bring Costs Down

The Workers’ Compensation Insurance Rating Bureau of California has completed its report summarizing insurer loss and premium experience through Sept. 30, 2006.

The data seems to verify that workers’ compensation reforms are working to bring costs down. Among the highlights quoted from the report:
“• California statewide written premium (gross of deductible credits) is estimated at $12.8 billion for the first nine months of 2006. This is approximately 21 percent below the written premium reported for the first nine months of 2005.
• The average statewide insurer rate (final insurer rates reflecting all rating plan adjustments except deductible credits, retrospective rating plan adjustments, and policyholder dividends) per $100 of payroll for policies written in the third quarter of 2006 is $3.21. This is
29 percent below the average rate charged for the second six months of 2005 and 50 percent below the average rate charged in the second six months of 2003.
• After reflecting the estimated impact of AB 227, SB 228 and SB 899 on unpaid losses, the ultimate accident year losses for 2005 are projected by the WCIRB to be $6.4 billion.This represents a decrease in estimated losses of approximately 11 percent from the ultimate losses currently projected for accident year 2004 and 46% from the ultimate losses currently projected for accident year 2002 (Exhibit 3).
• The calendar period loss ratio reported for the first nine months of 2006 is 43 percent. This ratio is 10 percentage points below the ratio for the first nine months of 2005 and 11 percentage points
below the full calendar year 2005 loss ratio. The calendar year combined ratio for 2005 is 79 percent — the lowest in many years.”

The summary report is based on data reported to the WCIRB by insurers who wrote approximately 90 percent of the statewide market using 2005 premium levels. To view the full report, visit https://wcirbonline.org/resources/data_reports/pdf/093006_insurer_exp.pdf.

Source: WCIRB