California: Comp rates remain relatively unchanged in '09

Workers' compensation rates in California saw little change in 2009, according to new data. However, the report by the Workers' Compensation Insurance Rating Bureau of California found that rising unemployment affected insurers' gross written premium, which was down significantly over 2008 numbers.

The study reviewed 2009 experience submitted by insurers who wrote approximately 100 percent of the statewide market for workers' comp. Researchers found that California written premium was an estimated $8.9 billion for the year -- 17 percent below 2008 and 64 percent below 2004, when many reforms were implemented to the workers' comp system.

The average insurer rate per $100 of payroll for policies written in 2009 was $2.35. This was comparable to the average rate charged in 2008, but nearly 64 percent less than what was charged in the second six months of 2003.

NFL seeks to seal the deal against players filing in California (04/19/12)
Washington: DLI looks to establish medical provider network (09/10/12)
Physician-owned surgery centers come under researchers' scrutiny (06/18/12)
Coalition disputes contentions in think tank's report on N.Y. assessments (04/19/12)
Report outlines effective strategies for successful self-insurance groups (06/18/12)

Among the highlights of the report, researchers found that:

Ultimate accident year loses declined. The total ultimate accident year losses for 2009 was $6.9 billion -- 9 percent below the 2008 level and 44 percent below the pre-reform high in 2002. The report projected an ultimate accident year loss ratio of 75 percent for 2009, which is the highest estimated ratio since 2002.
Combined loss and expense ratio skyrocketed. The ultimate accident year 2008 combined loss and expense ratio was estimated at 108 percent, which was 17 percent higher than 2007. Although the WCIRB does not yet have expense information for 2009, researcher said the increase in accident year loss ratio suggests that the 2009 combined ratio will be considerably higher than 2008.
Indemnity claim frequency and severity rose. The report estimated that indemnity claim frequency per adjusted premium dollar for 2009 was 3 percent higher than for 2008. Researchers said that while there was a significant decrease (13 percent) in the number of indemnity claims in 2009, that drop was more than offset by reduced premium levels. Indemnity claim frequency for 2009 was estimated at approximately one-third of its all-time high in 1991.

Researchers estimated that the average severity of a 2009 indemnity claim was $58,000, which represented a 4 percent increase over 2008 after three years of severity increasing at an average annual rate of 13 percent per year. The study concluded that both indemnity and medical average costs per claim showed increases in 2009 that were significantly less than that of the prior three years.

Researchers said the study accounted for the Workers' Compensation Appeals Board's 2009 en banc decisions -- Ogilvie v. City and County of San Francisco, Almaraz v. Environmental Recovery Services, and Guzman v. Milpitas Unified School District -- that have the potential to significantly increase costs, including those on existing claims.

Read more at the WORKERSCOMP Forum^TM homepage.

May 24, 2010

Newsletter Sign-up