Workers comp premiums drop in CaliforniaReprints
California written premium for 2017 is 2% below that for 2016 and represents the first decrease in seven years, according to the Workers Compensation Insurance Rating Bureau of California’s quarterly report for year-end 2017, released Friday.
The projected industry average charged rate per $100 of payroll for policies incepting in 2017 is $2.46, which is 10% below that for 2016 and 17% below the peak in 2015, the Oakland-based WCIRB said in the report.
The WCIRB projects an ultimate accident year combined loss and expense ratio of 92% for 2017, a projection that is 5 points higher than that for 2016, as premium levels have lowered while average claim severities increased moderately, the bureau said in a statement.
Other highlights of the report include:
- Indemnity claims continue to settle quicker, and the ratio of claim closure for 2017 represents a 17-year high.
- The WCIRB projects indemnity claim frequency for accident year 2016 to be 3% below the frequency for 2015. However, claim frequency for 2017 shows a modest increase of 1%, similar to other recent years.
- The bureau projects the average cost, or severity, of a 2016 indemnity claim to be approximately $77,000, which is 4% higher than the projected severity for 2016 following several years of relatively flat severities.
- Average pharmaceutical costs per claim for the first three quarters of 2017 are 70% below the levels from 2012. This is prior to the impact of the new drug formulary effective in 2018, which is expected to further reduce pharmaceutical costs.
- The average number of liens filed in 2017 is 40% below the averages experienced shortly prior to the implementation of the state 1244 reforms impacting lien filings.