California comp premiums rise while combined ratio falls

The California Workers’ Compensation Insurance Rating Bureau said Monday that California workers compensation written premiums increased 5% year-over-year to $14.1 billion for the first nine months of 2016, while the state's workers comp combined ratio fell below 100% for the first time since 2007.

The Oakland, California-based WCIRB said California comp insurers had a 99% combined ratio in 2015, down from 104% in 2014. The last time California comp market was profitable was in 2007, when insurers saw a combined ratio of 85%, according to the rating bureau.

“The lower combined ratio reported for 2015 is primarily a result of increased premium levels and significant reductions in insurer case reserves in 2015,” the report said.

The WCIRB report showed that indemnity claim frequency improved slightly for California in recent years. The frequency fell 1.5% year-over-year during the first nine months of 2016 and fell 0.2% in the 2014-15 accident year. That's down from a frequency increase of 2.2% in the 2013-14 accident year. 

Still, WCIRB noted that California indemnity claim frequency remains higher than 2009 levels.

"The frequency increase experienced since 2009 is largely attributed to increases in cumulative injury claims, late reported indemnity claims, claims involving injuries to multiple body parts, and claims from the Los Angeles Basin area," the report said.

California workers comp claim severity reached $80,735 in 2015, up 3.2% from $78,226 in 2014. But WCIRB said California workers comp reforms passed in 2012 caused medical costs for indemnity claims to fall 10% between 2011 and 2014.