California workers’ comp carriers wrote more premium in 2011 for the second year in a row. This has not slowed the increase in premium. The combined ratio for 2009 and 2010 was 130%. This will have minimal impact on the combined ratio for 2011, according to the Workers’ Compensation Insurance Rating Bureau.
The high administrative costs are a cause for the increases as well the offset of the moderate increase in claim severity for indemnity claims.
The Workers’ Compensation Insurance Rating Bureau has estimated the total cost for indemnity claims in 2011 is $67,000. This is an increase from $65,495 in 2010. The claims occurrence of 15.6 per 1,000 full time employees should remain constant. The total benefits in 2010 increased to $8.1 billion, and is expected to increase in 2011.
The administrative costs are increasing, and the carriers are spending more on loss adjustment expenses. The carriers cost for medical is at $10,988 per indemnity claim. The total in 2009 was $9,982 and $8,739 in 2008.
A major factor in the increases is the number of injured workers obtaining attorneys. This is increasing the costs on both sides. The carriers spent $608 million defending claims in 2010, up from $584 million. The attorneys made $353 million in 2010. This was an increase of $40 million from the prior year.