The WCIRB has completed its report on statewide workers’ compensation insurer loss and premium experience through December 31, 2016.

California written premium (gross of deductible credits) for 2016 is approximately $18.1 billion, which is 3% above the written premium reported for 2015

The preliminary calendar year combined loss and expense ratio for 2016 reported by insurers is 96%, which is below the combined ratios for the last several years. The lower combined ratios reported for 2015 and 2016 are primarily a result of increased premium levels and significant reductions in insurer case reserves in 2015 and 2016.

The combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by earned premium. The ratio is typically expressed as a percentage. A ratio below 100% indicates that the company is making underwriting profit while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums. Even if the combined ratio is above 100%, a company can potentially still make a profit, because the ratio does not include the income received from investments.

The WCIRB projects indemnity claim frequency for accident year 2016 to be 1.3% below the frequency for 2015 but 9% above the frequency for 2009 . The frequency increases experienced from 2009 through 2014 are largely attributed to increases in cumulative injury claims, late reported indemnity claims, claims involving injuries to multiple body parts, and claims from the Los Angeles Basin area. 2015 and 2016 represent the first consecutive years of projected indemnity claim frequency decline since before the Great Recession.

The WCIRB projects the average cost (or “severity”) of a 2016 indemnity claim to be approximately $82,000, which is 4% higher than the projected severity for 2015 and 10% higher than that for 2013

The projected industry average charged rate (rates charged by insurers that reflect all rating plan adjustments except deductible credits, retrospective rating plan adjustments, terrorism charges, and policyholder dividends) per $100 of payroll for policies incepting between July 1, 2016 and December 31, 2016 is $2.67 (Exhibit 2). This is 6% below the average rate charged for the first six months of 2016 and 12% below the average rate charged for the first six months of 2015.

The WCIRB currently projects the total statewide ultimate losses on all injuries that occurred on or before December 31, 2016 to be approximately $4.6 billion less than the amounts reported by insurers.