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The WCIRB has released its quarterly update on California statewide insurer experience valued as of September 30, 2018. The report is mostly good news for California employers and industrial insurance carriers.

California written premium for the first nine months of 2018 is $13.1 billion, which is 3% below the written premium reported for the first nine months of 2017. Written premium for 2017 was 2% below that for 2016. The decrease in 2017 following 7 consecutive years of increases is primarily driven by decreases in insurer charged rates more than offsetting increases in employer payroll.

The projected industry average charged rate per $100 of payroll for policies incepting in the first nine months of 2018 is $2.28, which is 10% below the average rate charged in 2017. The January 1, 2019 approved advisory pure premium rates are on average 42% below those for January 1, 2015.

The WCIRB projects an ultimate accident year combined loss and expense ratio of 87% for 2017, which is 4 points higher than 2016 projections as premium levels have lowered while average claim severities moderately increased. Despite the projected increase, the combined ratios for 2014 to 2017 remain the lowest since the 2004 to 2006 period.

Indemnity claims continue to settle quicker, improving significantly over the last 6 years.

Claim frequency increased by 11% from 2009 to 2014, but has decreased by 4% from 2014 through the first 9 months of 2018. Frequency increases since 2011 have largely been attributed to increases in cumulative injury claims and claims from the Los Angeles Basin area.

Cumulative trauma (CT) claim rates increased by over 75% from 2005 to 2015. The ratio for 2016 declined modestly suggesting the CT claim growth is beginning to level off. Recent sharp increases in CT claims is focused entirely in the Los Angeles and San Diego areas.

Decreases in medical severities from 2011 to 2015 were driven by the medical cost savings arising from SB 863. The projected 2017 medical severity increase of 2% represents very modest growth compared to other post-reform periods of medical inflation in California.

The WCIRB projects the average cost (or “severity”) of a 2017 indemnity claim to be approximately $69,500, which is 2% higher than the projected severity for 2016. Total claim severity growth over the last several years has been relatively modest as increases in average indemnity and ALAE costs have been in part offset by declines in average medical costs through 2016.

The full report is available in the Research section of the WCIRB website, WCIRB Quarterly Experience Report – As of September 30, 2018