WCIRB Report on Q3 2003 Insurer Results Released

The WCIRB has compiled a summary of insurer reports of loss and premium experience valued as of September 30, 2003. The report shows that statewide insurer written premium for the first three quarters of 2003, prior to adjustment for reinsurance or deductible credits, was in excess of $15 billion. As a result, the WCIRB estimates that the total written premium for the full 2003 year will exceed $21 billion.

The WCIRB also reported that the average final insurer rate per $100 of payroll for policies written in the third quarter of 2003 was $6.30. This was 9 percent above the average rate charged for the first six months of 2003 and almost three times the average rate charged on policies written in 1999.

The WCIRB report also includes loss projections that have been updated based on September 30, 2003 experience. After reflecting the estimated impact of AB 227 and SB 228 on unpaid medical losses, the WCIRB estimates that the ultimate accident year 2002 combined loss and expense ratio is 111 percent. As shown, for the prior five accident years, estimated combined ratios ranged from 136 percent to 174 percent.

Other highlights of the report include:

After reflecting the estimated impact of AB 227 and SB 228 on unpaid medical losses, ultimate accident year losses for 2002 are currently projected by the WCIRB to be $11.9 billion. This amount is $0.5 billion greater than the losses projected for 2001 and the highest amount ever projected by the WCIRB.

The calendar year 2003 loss ratio reported by insurers at September 30, 2003 (gross of any reinsurance or deductible adjustments) is 81 percent, which is 5 percentage points below the nine-month calendar period loss ratio reported for 2002.

Indemnity claim frequency for the first nine months of 2003 is estimated to be 0.1 percent below that for the first nine months of 2002. Indemnity claim frequency for 2003 is estimated at 57 percent of its all-time high in 1991.

After reflecting the estimated impact of AB 227 and SB 228 on unpaid medical losses, the WCIRB projects the average cost of a 2002 indemnity claim will be approximately $47,000, which is about 5 percent greater than the average cost of a 2001 indemnity claim and 128 percent above the average cost of a 1994 indemnity claim. This represents an annual growth rate since 1994 of approximately 11 percent, which is well above the level of general and medical inflation.

After reflecting the estimated impact of AB 227 and SB 228 on unpaid medical losses, the WCIRB’s current estimate of ultimate losses on all injuries that occurred on or before December 31, 2002, exceeds the amount reported by insurers for those injuries by $9.1 billion. Of this $9.1 billion difference over all accident years as of December 31, 2002, $2.8 billion is on accidents occurring in 2002 and $1.7 billion is on accidents occurring in 2001.

To view the WCIRB report, visit the WCIRB’s Web site at http://wcirbonline.org/index.asp.