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Reflecting the
California workers' comp market's continuing
improvement, the average statewide insurer
rate per $100/payroll for policies written in
the third quarter—excluding deductible
credits--is $4.42. This is almost 18 percent
below the rates charged in the first 6 months
of 2005 and 32 percent below the average rate
charged for the second six months of 2003,
according to the Workers' Compensation
Insurance Rating Bureau.
But written
premium reported for the first nine months of
2005 was also down to $16.3 billion, 10
percent below the written premium reported for
the first nine months of 2004.
Most carriers
lowered rates significantly for July 2005 and
plan to do so January 2006, but the industry
and the California Department of Insurance
expect a slow down in rate decreases after
January, as most of the reforms have filtered
through the system.
Reflecting on
the estimate impact of the major reform bills
including the SB 899, accident year losses for
2004 are projected by the Bureau to be $8.4
billion. This represents a decrease in
estimated losses of approximately 24 percent
from the ultimate losses currently projected
for accident year 2003 and 33 percent from the
ultimate losses currently projected for
accident year 2002.
In addition,
after considering the estimated impact of the
reforms on unpaid losses, based on September
30, 2005 experience, the Bureau projects
ultimate accident year loss ratios of 139%,
124%, 107%, 85%, 54% and 36% for the 1999,
2000, 2001, 2002, 2003 and 2004 accident
years, respectively
On unpaid
losses, according to the Bureau, the ultimate
accident year 2004 combined loss and expense
ratio is estimated to be 59%. This estimate
reflects a continuing sharp decline in
accident year combined ratios from the 1999
peak value of 184%.
The average
cost of a 2004 indemnity--$41,000--claim is
also down, 10 percent lower than in 2003. But
it's still twice as much as a 1993 indemnity
claim, although medical severity has declined
over the last two years, according to Bureau
data.
(article
taken from WC Executive)
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