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Report on Q3 2013 Insurer Experience Released

The WCIRB has completed its quarterly review and analysis of premium and loss data submitted by California workers’ compensation insurers. The analysis of data valued as of September 30, 2013 represents more than 99% of the statewide market.

Among the finding of the report are:

  • California workers’ compensation 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 nine months of 2013 is approximately $11.2 billion, which is approximately 19% above the written premium reported for the first nine months of 2012.
     
  • The projected industry average charged rate per $100 of payroll for policies written between January 1, 2013 and September 30, 2013 is $2.81. This is approximately 8% above the average rate charged for the second six months of 2012 and 34% above the average rate charged for 2009.
  • The WCIRB projects total ultimate losses and allocated loss adjustment expense (ALAE) for accident year 2012 to be $11.6 billion, which is approximately 6% above the projection for accident year 2011 and 20% above the projection for accident year 2009.
     
  • The WCIRB projects an ultimate accident year loss and ALAE ratio of 96.4% for accident year 2012. While this projection has increased from previous WCIRB estimates for the accident year as a result of increased loss development experienced in 2013, it remains significantly below that of the prior three accident years as a result of increasing premium levels in 2012.
     
  • The WCIRB projects an ultimate accident year combined loss and expense ratio of 122% for accident year 2012, which is below that of the prior three accident years primarily as a result of increasing premium levels and lower insurer expense ratios in 2012.
  • The calendar year combined loss and expense ratio for 2012 reported by insurers is 114%, which is somewhat below the combined ratios for the prior three calendar years but 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 3.9% above the frequency for 2011 and 8.8% above the frequency for 2009. The projected indemnity claim frequency for the first nine months of 2013 is 5.0% higher than that for 2012. A preliminary analysis of the 2012 frequency increase by WCIRB staff indicates an increase in cumulative injury claims, permanent disability claims, claims involving injuries to multiple body parts, and claims from the Los Angeles region.
  • The WCIRB projects the average loss and ALAE cost (or “severity”) of a 2012 indemnity claim to be approximately $85,800, which is generally comparable to the projected severity for accident year 2011 but above the projected severities for accident years 2009 and 2010.

For More Information

December 16, 2013