California Workers’ Comp Premium Up 11% in 2014; Combined Ratio Still Exceeds 100

California written premium for calendar year 2014 was roughly $16.5 billion, 11 percent above 2013 and 88 percent above the written premium reported for 2009, according to a report from the California Workers’ Compensation Insurance Rating Bureau on experience through Dec. 31, 2014.

The projected industry average charged rate per $100 of payroll for 2014 was $2.93. This was roughly 2 percent above the average rate charged for 2013 and 40 percent above the average rate charged for 2009. However, the average rate charged for 2014 remains roughly 53 percent less than the average rate charged for the second six months of 2003, the report shows.

The WCIRB projects total ultimate losses and allocated loss adjustment expense for accident year 2014 to be $12.6 billion. While roughly 4 percent above the projection for accident year 2013 and 27 percent above the projection for accident year 2009, it remains below the highs experienced prior to the 2002 through 2004 reforms, according to the WCIRB.

The WCIRB projects a preliminary ultimate accident year combined loss and expense ratio of 103 percent for 2014. Of this, 61 percent is attributable to the indemnity and medical loss ratio and 42 percent is attributable to the loss adjustment and other expense ratio.

Like the projected 2014 loss and the allocated loss adjustment expense, this projection is primarily a result of increased premium levels and relatively low claim severity growth in 2014, according to the report.

The preliminary calendar year combined loss and expense ratio for 2014 reported by insurers was 105 percent, slightly below the combined ratios for the last several years, but 2014 is the seventh consecutive year with a combined ratio over 100 percent.

The WCIRB projects indemnity claim frequency for accident year 2014 to be 1.2 percent above the frequency for 2013.