San Francisco, CA – The WCIRB Actuarial Committee recently met to continue its review of March 31, 2012 loss and loss adjustment expense experience in preparation for the January 1, 2013 Pure Premium Rate Filing.
At the meeting, the Actuarial Committee:
- Recommended loss and loss adjustment expense projection methodologies that generated a preliminary indicated January 1, 2013 average pure premium rate of $2.68 per $100 of payroll. This compares to an industry average filed pure premium rate of $2.38 as of July 1, 2012.
- Noted that the change in the indicated average pure premium rate from $2.43 per $100 of payroll in the July 1, 2012 Pure Premium Rate Filing to $2.68 was due to increasing loss development, continued higher levels of claim frequency, increasing allocated loss adjustment expenses, increases in the forecast rate of future loss inflation, and reduced forecasts of payroll growth as the California economy continues its very sluggish recovery.
- Reviewed an analysis of the recent growth in indemnity claim frequency which suggested that the increase in frequency was attributable to growth in cumulative injury claims, increases in the proportion of all claims now involving indemnity benefits, growth in the number of smaller non-cumulative injury or specific injury claims, and increases in the number of late-reported claims. The increase in the frequency of smaller indemnity claims has significantly dampened average indemnity claim severity.
- Reviewed a summary of the latest information on industry average filed rates. The industry average filed pure premium rate as of July 1, 2012 of $2.38 per $100 of payroll is almost 6% above the industry average filed pure premium rate as of January 1, 2012 and almost 8% above the industry average filed pure premium rate as of July 1, 2011. (The earlier period average pure premium rates have been updated based on the most current payroll distributions by classification and insurer.)
A summary of the Actuarial Committee’s analysis and recommendations will be presented to the WCIRB Governing Committee at its August 15, 2012 meeting.
The Agenda for the August 2, 2012 Actuarial Committee meeting may be viewed, printed or downloaded from the About the WCIRB section of the WCIRB website (www.wcirbonline.org). Minutes for this meeting will be posted to the WCIRB website when available.
Source: CA WCIRB