Written premiums in California stabilized in 2022 through 2024 after the large swings during the pandemic, while the combined ratio rose to the highest level in 14 years, a new report shows.
The Workers’ Compensation Insurance Rating Bureau of California released its Quarterly Experience Report, an update on statewide insurer experience valued as of Dec. 31, 2024.
The WCIRB report also shows the average charged rate for 2024 was roughly 1% higher than 2023, marking the first increase after consecutive years of declining average charged rates.
The projected combined ratio for 2024 rose by 9 points from 2023. At 123%, that makes it the highest combined ratio in 14 years. The 2024 ratio was mostly driven by higher average medical costs, average allocated loss adjustment expense costs and indemnity claim frequency, according to the WCIRB.
“The increase in 2024 is driven by higher claim frequency, average loss and LAE costs, with modest changes in earned premium,” the report states. “Combined ratios have been at 110% or higher for the past 4 years. The last time combined ratios were over 100% for a sustained period was before the Senate Bill No. 863 (SB 863) reforms.”
Rising costs in the system prompted the WCIRB to propose a 11.2% advisory pure premium rate increase for September 1, 2025.
According to the report, indemnity claims had been settling more quickly through the second quarter of 2020, primarily driven by reforms to the state’s workers’ comp system. Following the volatile changes that occurred during the pandemic, indemnity claim frequency continued to increase, largely due to a sharp increase in the frequency of claims involving cumulative trauma injury in 2022 and 2023. The report expects to see that trend to likely continuing into 2024.
“Projected severity on indemnity claims for 2024 is 6% higher than 2023 and 33% above 2016,” the report states. “The average severity in 2024 is the highest it has been in more than a decade, since before the SB 863 reforms.”
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