Average Calif. workers comp indemnity hits $66,922 in 2011: Institute

OAKLAND, Calif.—The average cost of a California workers compensation indemnity claim edged up slightly to reach a record high of $66,922 for 2011, a California Workers' Compensation Institute bulletin states.

While the average cost of a 2011 indemnity claim is only slightly higher than the average cost during 2009 and 2010, it is about $20,000 more the cost of an average claim in 2005, the Oakland-based CWCI said in its bulletin, released Thursday.

Rising medical and indemnity costs account for the rising claim severity, the CWCI reported.

Among other data, the research organization estimates that workers comp insurers expect to pay out $8.4 billion in claims for accident year 2011, which is an eight-year high.

Direct written premium, meanwhile, “plunged from a record $16.3 billion in 2004 to $6.5 billion in 2009, but over the past two years has climbed back to $7.9 billion, as covered payroll has increased and premium rates have started to creep up as losses increase,” the organization said in the bulletin.

For 2011, indemnity claim frequency registered a “marginal decline” of 0.3%. But the 2011 decrease follows a 9.1% increase in 2010, which grabbed industry attention because it was the first increase in more than a decade.

“The 2011 (frequency) experience repeats the dominant pattern since 2005, with total insured losses gradually edging up as reductions in claim frequency are offset by rising claim severity,” the CWCI reported.