The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released their quarterly update on California’s insurer experience and found that written premium for the first quarter of 2019 was well below 2018’s rate.
https://www.wcirb.com/sites/default/files/documents/quarterly_experience_report_2019_1q.pdf
Written premium, valued as of March 31st, is 12 percent lower than the same period in 2018, which suggests premium decreases will escalate in 2019. Written premiums for the first quarter were $4.4 billion. The average charged rate for the first three months of 2019 is 10 percent below that for 2018, and 31 percent below the peak in 2014. The approved advisory pure premium rates starting January 1st, 2019 are on average 42% lower than those starting January 1st, 2015. WCIRB proposed a further 5% decrease in advisory pure premium rates for January 1st, 2020.
Higher claim severities and lower premium rates in 2018 drove the accident year loss ratio up to 91% in 2018, up from 85% in 2017 which made it the sixth consecutive year of combined ratios below 100%.
Indemnity claims are being settled quicker, the ratio for 2019 (36% of open indemnity claims closed in the next year) is a 20-year high. Cumulative trauma claim rates have increased, and the ratio of those claims to all indemnity claims has increased by over 80% since accident year 2005.
Projected claim severity for 2018 is 6% higher than for 2017. This comes after several years of flat to modestly declining claim severities.
Check out the report from WCIRB here and their press release.
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