The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its Second Quarter 2022 Quarter Experience Report. This report is an update on California statewide insurer experience valued as of June 30, 2022.
Highlights of the report include:
– – Written 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.
– – Written premium for the first six months of 2022 is 27% above that for the first six months of 2021. Much of this increase is being driven by higher employee wage levels and the continued economic recovery.
– – The average charged rate for the first half of 2022 is 3% below 2021 and the lowest in decades.
– – The projected loss ratio for 2021, including the cost of COVID-19 claims, is 6 points above that for 2020 and 12 points above that for 2019.
– – Projected loss ratios have been growing steadily since 2016, mostly as a result of declining insurer rate levels.
– – The projected combined ratio for 2021, including COVID-19 claims, is 8 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 100%, which are still higher than those of 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 declined sharply beginning in the second quarter of 2020 due to the pandemic.
– – After bottoming in 2021, average claim closing rates are beginning to increase in 2022.
– – 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, suggesting an increase in post-termination claims.
– – Projected total indemnity claim severity for 2021, excluding COVID-19 claims, is 1% below 2020 but 11% above 2017.
This information presented reflects a compilation of individual insurer submissions of information to the WCIRB. While the individual insurer data submissions are regularly checked for consistency and comparability with other data submitted by the insurer as well as with data submitted by other insurers, the WCIRB can make no warranty with respect to the information provided by third parties.