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

Average Claim Costs

At the same time that premiums and claim frequency were declining, the total amount insurers paid on indemnity claims jumped sharply due to increases in the average cost of an indemnity claim, which rose dramatically during the late 1990s.

The total average cost of indemnity claims decreased by 16 percent from 2002 to 2005 reflecting the impact of AB 227, SB 228 and SB 899.  However, the total, indemnity and medical average costs per claim increased between 2004 and 2005.

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Please note that the WCIRB’s estimates of average indemnity claim costs have not been indexed to take into account wage increase and medical inflation.

Current State of the Insurance Industry

Market Share

A number of California insurers left the market or reduced their writings as a result of the decrease in profitability, contributing to a major redistribution of market share among insurers since 1993, as shown in the following chart.  

According to the WCIRB, California companies (excluding SCIF) insured just 5 percent of the California workers’ compensation market in 2004, compared with 36 percent of the market in 1994. From 2002 through 2004, SCIF attained about 35 percent of the California workers’ compensation insurance market, double the market share it had in the 1990s.  However, between 2004 and 2005, SCIF’s market share decreased to 29 percent.

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