California's workers' comp reforms in recent years have had a significant effect in lowering loss ratios and premiums, according to a report by the state Workers' Compensation Insurance Review Board. Based on the estimated effect of reforms enacted in 2003 and 2004, the WCIRB found that:
o Written premium for the first nine months of 2005 was $16.3 billion–roughly 10 percent lower than for the same period the year before.
o The average rate per $100 of payroll fell even more sharply, dropping 18 percent from $5.37 in the first half of 2005 to $4.42 for the third quarter.
o Ultimate accident-year losses for 2004 will be $8.4 billion, a decrease of 24 percent from the current projections for 2003 and 33 percent from the projections for 2002.
o The ultimate accident-year loss ratio will be 36 for 2004, down from 54 for 2003 and 85 for 2002.
o For the calendar year, the loss ratio for the first nine months of 2005 was 57–five points lower than that for the same time period in 2004.
o The combined ratio for workers' comp for 2004 is 85.
o Indemnity claims frequency during the first nine months of 2005 decreased by 11 percent from the same period in 2004, and is less than half the all-time high set in 1991.
o The average cost of an indemnity claim in 2004 was $41,000, down 10 percent from 2003 and 15 percent from 2002. (However, the average cost of a claim in 2004 was still twice that of a claim in 1993.)
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