WCIRB Report on First Quarter 2013 Experience Released
The WCIRB has completed its report on insurer loss and premium experience through March 31, 2013. The major findings of the report include:
California written premium (gross of deductible credits) for calendar year 2012 is approximately $12.5 billion. This is approximately 16% above the written premium reported for 2011 and 42% above the written premium reported for 2009.
Written premium for the first quarter of 2013 is approximately $3.9 billion, which is approximately 18% above the written premium reported for the first quarter of 2012.
The projected industry average charged rate per $100 of payroll for policies written between January 1, 2013 and March 31, 2013 is $2.83. This is approximately 10% above the average rate charged for the second six months of 2012; however, it is approximately 55% less than the average rate charged for the second six months of 2003.
The WCIRB projects total ultimate losses and allocated loss adjustment expenses (ALAE) for accident year 2012 to be $11.0 billion. While approximately 5% above the projection for accident year 2011 and 17% above the projection for accident year 2009, it is approximately 20% below the highs experienced prior to the 2002 through 2004 reforms.
The WCIRB projects an ultimate accident year loss and ALAE ratio of 91.4% for accident year 2012, which is significantly below that of the prior three accident years as a result of increasing premium levels and modest claim cost trends in 2012.
The WCIRB projects an ultimate accident year combined loss and expense ratio of 117% for accident year 2012. This projection is below that of the prior three accident years primarily as a result of increasing premium levels, modest claim cost trends, and lower insurer expense ratios in 2012.
The calendar year combined loss and expense ratio for 2012 reported by insurers is 115%, which is fairly consistent with the combined ratios for the prior three calendar years and represents the fourth straight calendar year with a combined ratio of over 110%.
The WCIRB projects indemnity claim frequency for accident year 2012 to be 1.7% above the frequency for 2011 and 6.5% above the frequency for 2009. The projected indemnity claim frequency for the first quarter of 2013 is 0.4% higher than that for 2012.
The WCIRB projects the average loss and ALAE cost (or “severity”) of a 2012 indemnity claim to be approximately $82,900, which reflects an increase of approximately $29,000 (or more than 50%) since the full implementation in 2005 of the reforms of 2002 through 2004.