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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 March 31, 2022.

Written premium for 2021 was 1.4% below that for 2020 and is the lowest since 2012. Premium declined sharply beginning in the second quarter of 2020 due to the economic downturn resulting from the pandemic. The modest decrease in written premium for 2021 was driven by continued insurer rate decreases offsetting growth in employer payroll.

However written premium for the first quarter of 2022 is 22% above that for the first quarter of 2021 and 5% above that for the first quarter of 2020 (which was pre-pandemic).

The average charged rate for the first quarter of 2022 is 3% below that of 2021 and is the lowest in decades. In the September 1, 2022 filing, the WCIRB proposed an average 7.6% increase in advisory pure premium rates. Nonetheless, in the Decision on the Filing, the Insurance Commissioner did not approve any change in the average advisory pure premium rate.

The projected loss ratio for 2021, including COVID-19 claims, is 5 points above that for 2020 and 11 points above that for 2019. Projected loss ratios have been growing steadily since 2016.

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 110% and the projected ratio for 2020 is 99%, 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 the first quarter of 2020, primarily driven by the reforms of SB 863 and SB 1160. Average claim closing rates have plateaued in 2021 and 2022 but remain lower than the immediate pre-pandemic period.

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. In particular, the 2020 increase in CT claim rates is largest in industry sectors that had the largest job losses in 2020.

Projected total claim severity for 2021, excluding COVID-19 claims, is 1% below 2020 but 12% above 2017. Following several years of flat indemnity severities, the projected indemnity severity for 2021 is 2% higher than 2020 and 19% higher than 2017. Recent growth in indemnity claim severities has been in part driven by higher-than-typical average wage inflation over the last two years.

The full WCIRB Quarterly Experience Report – As of March 31, 2022 is in the Research section of the WCIRB website.