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SELECTED INDICATORS IN WORKERS’ COMPENSATION:   A REPORT CARD FOR CALIFORNIANS

The total amount of earned workers' compensation premium decreased during the first half of the 1990's, increased slightly in the latter part of the decade, then increased sharply in the new millennium.

This increase in total premium appears to reflect:

Movement from self-insurance to insurance.

An increase in economic growth.

Wage growth.

Increase in premium rates.

Premiums from 2001 through 2003 were up sharply primarily due to rate increases in the market.  The WCIRB reports that the average rate on 2001 policies was about 34 percent higher than on 2000 policies, and the average rate on 2003 policies was 36 percent higher than on 2002 policies.

While the WCIRB reported that rates began to decline in 2004 and continued to decline in 2005, as a result of earlier rate increases in 2003 as well as the other factors cited above, 2004 earned premiums were up over 2003.

However, earned premiums in 2005 declined sharply as a result of market rate decreases following the reforms that took effect in 2003 and 2004.

Workers’ Compensation Written Premium

The WCIRB defines written premium as the premium an insurer expects to earn over the policy period.  After elimination of the minimum rate law, the total written premium declined from a high of $8.9 billion in 1993 to a low of $5.7 billion ($5.1 billion net of deductible) in 1995. The written premium grew slightly from 1996 to 1999 due to growth of insured payroll, an increase in economic growth and movement from self-insurance to insurance and other factors, rather than due to increased rates. However, even with well over a million new workers covered by the system, the total premium paid by employers remained below the level seen at the beginning of the decade.

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