Expect workers’ compensation insurance rates in California to continue to fall, with total written premium expected to drop by $1 billion or more for 2019 despite the positive impacts of continued economic growth, a new report shows.

“We’re experiencing more than a $2 billion impact of lower rates,” said David Bellusci, executive vice president and chief actuary of the Workers’ Compensation Insurance Rating Bureau of California.

Bellusci on hosted a webinar – summarized in a report in the Insurance Journal – to give a rundown on the WCIRB’s just-released 2019 State of the System report.

Even with the falling written premium, the report portrays a healthy worker’s comp market in California that’s “very nonconcentrated,” with several hundred insurers participating, according to Bellusci.

Last year was the sixth consecutive year the industry has posted a combined loss and expense ratio below 100. The combined ratio was 90 in 2018. The ratio hit a high in 1999 of nearly 200 percent. “It’s been probably the most stable period we’ve seen,” Bellusci said. He expects the combined ratio to begin to go up, somewhat due to a modest rise in severity trends, but it will be largely due to declining rates. Bellusci said the ratio may get pushed into the mid- to higher-90s for 2019.

More than an additional $1 billion in payroll each year is being generated by economic growth. However, lower rates are reducing total written premium by more than $2 billion annually, according to Bellusci.

Written premium is expected to a total of $15.7 billion in 2019, down from $17 billion in 2018. Written premium has been on the decline since 2016 when it was $18.1 billion.

Reforms from SB 863 passed in 2012 have saved the workers’ comp system roughly $3 billion annually, with significant savings from lien cost, spinal surgeries and pharmaceutical costs, the report shows.

Despite recent rate decreases, California’s workers’ comp rates remain high compared with other states. Oregon does a state-by-state comparison every other year using Oregon’s industry mix as a control. The report last showed California’s workers’ comp rates at $2.87 per $100 of payroll compared with a nationwide average of $1.70. Bellusci attributed the state’s poor showing in that report to California’s high frequency of permanent disability claims, the long duration of medical payouts and high frictional costs.

Overall claim frequency in California has remained relatively flat, although the frequency of cumulative trauma claims continues to grow – particularly in the Los Angeles Basin and San Diego areas, the report shows. The L.A.-Long Beach area had a 32 percent higher frequency than the state average when controlled for industrial mix and wage levels, the report shows.