The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its 2024 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.

This annual report is developed to provide workers’ compensation professionals with a comprehensive view of California’s workers’ compensation system based on the latest available information.

Top take-aways from the report include:

– – The California workers’ compensation system has been relatively stable in the post-pandemic era. Premium levels increased by 1 percent in 2023 and are forecast to increase modestly in 2024, while decreases in average insurer charged rates are moderating.
– – Claim frequency changes in 2022 and 2023 are modest and consistent with pre-pandemic trends. The share of indemnity claims involving permanent disability has declined, but there are signs that the share of indemnity claims involving cumulative trauma is increasing.
– – The Los Angeles (LA)/Long Beach region has the highest claim frequency, about one-quarter above the statewide average, while the Peninsula/Silicon Valley region has the lowest frequency, more than one-quarter below the statewide average.
– – Among the factors driving higher claim frequency in Southern California is a higher proportion of CT claims and litigated claims.
– – Average indemnity costs continue to increase, primarily driven by increasing average wage levels. Average medical costs are also increasing, driven by claims remaining open longer post-pandemic and inflationary updates to medical fee schedules. Average allocated loss adjustment expense costs rose sharply in 2022 and 2023, driven by increased litigation across the state.
– – California continues to experience longer average claim duration compared to other states, driven by slower claim reporting and higher frictional costs, particularly medical-legal costs.
– – The projected accident year combined ratio increased by 2 points to 111 percent in 2023, the fourth consecutive year of a combined ratio above 100 percent. Combined ratios in California continue to be above those for the rest of the country.
– – In 2022 and 2023, payroll growth exceeded the impact of continued moderate insurer rate decreases, resulting in premium growth. Forecast continued growth in employer payrolls in 2024 is estimated to result in a modest premium increase.
– – In the WCIRB’s most recent filing, the WCIRB proposed an average increase of 0.9% in advisory pure premium rates, while the Insurance Commissioner approved an average decrease of 2.1%.
– – California has by far the highest permanent partial disability (PPD) claim frequency in the country, almost three times the countrywide median.
– – California’s high frequency of PPD claims is not driven by a more hazardous industrial mix or the number of very severe injuries, which are comparable to those from other lower-frequency states.
– – PPD claim frequency is significantly higher in the LA Basin area than in the rest of the state.

To access the report and supplementary data, visit the Research Studies and Reports: State of the System page on the WCIRB website. The page includes videos featuring WCIRB actuaries and industry experts discussing report highlights and how California workers’ compensation cost drivers compare to national benchmarks.