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The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its Quarterly Experience Report. This report is an update on California statewide insurer experience valued as of June 30, 2023. The report on balance is essentially good news for California Employers.

Highlights of the report include:

Written premium in 2022 is 14% higher than 2021 and almost at the pre-pandemic level. The increase is being driven by higher employee wage levels and the economic recovery. Written premium through the second quarter of 2023 of $8.5 billion is 4.1% higher than the same period in 2022.

The average charged rate for the first six months of 2023 continues to decrease; it is 3% lower than 2022 and the lowest in decades. In the September 1, 2023 Pure Premium Rate Filing, the WCIRB proposed an average 0.3% increase in advisory pure premium rates. In the FilingDecision, the Insurance Commissioner approved an average 2.6% decrease in advisory pure premium rates.

After five consecutive increases, the projected loss ratio, including the cost of COVID-19 claims, dropped 3 points in accident year 2022. The lower combined ratio in 2022 is driven by a significant increase in premium due to higher payrolls and very modest changes in claim frequency and severity.

Indemnity claims had been settling more quickly through the first quarter of 2020, primarily driven by the reforms of Senate Bill No. 863 (SB 863) and Senate Bill No. 1160 (SB 1160). Average claim closing rates declined sharply beginning in the second quarter of 2020 due to the pandemic. Average claim closing rates have steadily increased in 2022 and 2023, but remain below the pre-pandemic level.

Projected total indemnity claim severity for 2022 is 4% higher than 2021 and 16% above 2016. The average severity in 2022 is the highest it has been in more than a decade, since before the SB 863 reforms.

Pharmaceutical costs per claim decreased by 86% from 2012 through 2022. After increasing during the early pandemic period in 2020, average pharmaceutical costs per claim reverted to the pre-pandemic trend in 2021 and declined another 12% in 2022.

For more information, please download the full report with greater detail and graphs and other data.