The Workers’ Compensation Insurance Rating Bureau of California has released its Quarterly Experience Report. This report is an update on California statewide insurer experience valued as of December 31, 2021.

California written premium for 2021 is $0.3 billion or 2% below that for 2020 and $2.2 billion or 14% below that for 2019. Written premium declined sharply beginning in the second quarter of 2020due to the economic downturn resulting from the pandemic. The modest decrease in written premium for 2021 is driven by continued insurer rate decreases offsetting growth in employer payroll.

The average charged rate for 2021 is 7% below the rate for 2020 and is the lowest in decades. Since 2015, the Insurance Commissioner has approved 11 consecutive advisory pure premium rate decreases totaling over 50%. The WCIRB has proposed a 7.6% increase in advisory pure premium rates to be effective September 1, 2022.

The projected combined ratio for 2021, including COVID-19 claims, is 7 points higher than in 2020 and 33 points higher than the low point in 2016. Excluding COVID-19 claims, the projected combined ratio for 2021 is 111% and the projected ratio for 2020 is 100%, which are still higher than recent prior years. Combined ratios have been growing in California due to insurer rate decreases and modest growth in average claim severities.

Indemnity claims had been settling quicker through 2019, primarily driven by the reforms of SB 863 and SB 1160. Average claim closing rates declined sharply beginning in the second quarter of 2020 due to the pandemic. Average claim closing rates have started to plateau in 2021 but remain lower than the immediate pre-pandemic period.

The sharp decrease in 2020 claim frequency, excluding COVID-19 claims, was driven by the sharp economic downturn caused by the pandemic and stay-at-home orders. Non-COVID-19 claim frequency increased sharply in 2021 during the economic recovery. The change in non-COVID-19 claim frequency from 2019 to 2021 is -5%, which is more comparable to the modest declines in frequency during the immediate pre-pandemic period.

The share of indemnity claims arising from a COVID-19 diagnosis spiked during the “winter surge” in 2020. COVID-19 claims dropped sharply as the vaccines became widely available in the spring of 2021 and remained relatively low during the Delta variant period in the summer of 2021. A significant surge in the share of COVID-19 claims occurred in December 2021 and January 2022, driven by the Omicron variant.

Cumulative trauma (CT) claim rates increased through 2016 to be 80% above the 2005 level. CT claim rates were relatively consistent from 2016 through 2019. Preliminary data shows a sharp increase in CT claim rates in 2020, likely driven by shifts in claim patterns during the pandemic period.

The full report  WCIRB Quarterly Experience Report – As of December 31, 2021, is available in the Research section of the WCIRB website.