WCIRB REPORT ON INSURER EXPERIENCE RELEASED:

California’s Workers Compensation Insurance Rating Bureau has completed its quarterly report summarizing the most current insurer loss and premium experience as of Dec. 31, 2004. Among the highlights of the report are the following: The average statewide insurer rate per $100 of payroll for policies written in the second half of 2004 is $5.32, which was 16.5 percent below the average rate charged for policies incepting in the second six months of 2003. The WCIRB is estimating a combined loss and expense ratio for accident year 2004 of 72 percent. (The 2004 premiums used in this combined ratio, in large part, reflect rates charged on policies incepting in 2003 and early in 2004 and, for the most part, do not reflect the 16.5 percent reduction in average rates noted above.) This is the second consecutive accident year with an estimated combined ratio below 100 percent, following eight years for which the estimated combined ratios ranged from 121 percent to 186 percent with an average of 154 percent. Indemnity claim frequency for accident year 2004 is estimated to be 18.6 percent lower than for accident year 2003. Currently, the 2004 indemnity claim frequency is estimated at approximately 45 percent of its all-time high in 1991. The WCIRB projects the average cost of a 2004 indemnity claim will be approximately $52,000, which is 1 percent greater than the average cost of a 2003 indemnity claim and approximately 150 percent greater than the average cost of a 1994 indemnity claim. The WCIRB’s current estimate of ultimate losses on all injuries that occurred on or before Dec. 31, 2004 exceeds the amount reported by insurers for those injuries by $6.1 billion. This represents a significant decrease from the differences currently estimated for the immediately preceding five years, which ranged from $9.7 billion to $14.5 billion.