The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its 2023 State of the System Report. This report highlights key metrics of the California workers’ compensation system, including the latest trends on rates, market characteristics and profitability.

Some of the key findings of the report include:

– – The California workers’ compensation system has continued to move forward into the post-pandemic era. Driven by the economic recovery from the pandemic-related downturn, premium levels increased by 14% in 2022.
– – With flattening insurer charged rates an\d continued economic expansion,premium is forecast to be above the pre-pandemic level in 2023.
– – Current charged rates are at the lowest level in more than 50 years,as over the long term, declining claim frequency and increasing wage levels have offset rising medical costs and increases in indemnity benefits.
– – Average insurer manual rates are significantly above the rates charged to employers, indicating that insurers are, on average, applying significant pricing discounts to their filed rates.
– – Advisory pure premium rates, after loading for other expenses to approximate a 100% combined ratio, are higher than the average rates ultimately charged to employers, which include pricing discounts.
– – Average industry pricing discounts from filed rates, including the net impact of schedule rating, are about 30%.
– – The “white collar” type industries comprise a majority of statewide payroll but a relatively small share of pure premium.
– – The Utilities and Construction industries comprise only 6% of statewide payroll but almost triple the share of pure premium, as rates for these industries are higher.
– – Claim frequency is generally returning to pre-pandemic levels. The frequency of non-COVID-19 indemnity claims was relatively flat in 2022, following sharp changes in 2020 and 2021 related to the pandemic .
– – The WCIRB forecasts an average annual decrease in claim frequency of about 1% from 2022 to 2025, in line with the pre-pandemic rate of decline.
– – The share of indemnity claims involving cumulative trauma (CT) in 2021 is consistent with the pre-pandemic level after a sharp increase in 2020.
– – The vast majority of CT claims are in the LA Basin and San Diego, and approximately 40% are filed following termination of the employee.
– – After the Omicron surge in the winter of 2021, the share of COVID-19 claims and costs declined and has been stable for the majority of 2022 through early 2023.
– – Average indemnity claim costs continue to increase, primarily driven by increasing average wage levels.
– – Average medical claim costs remain relatively flat, driven by continued declines in the utilization of medical services offset by rising medical inflation.
– – Medical-legal costs continue to increase following implementation of the April 1, 2021Medical-Legal Fee Schedule.
– – California continues to experience longer average claim duration compared to other states, driven by a slower claim reporting,lower settlement rates and higher frictional costs.
– – With increasing premium levels and relatively stable claim frequency and severity trends, the accident year combined ratio decreased by 7 points to 105% in 2022.

To access the full report, visit the Research section of the WCIRB website.