Oakland, CA – The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently announced that it has released a new report, Impact of Economic Changes on California Workers’ Compensation.
Highlights of the report include:
- Employment and wages for most industries have rebounded from the initial pandemic related changes in 2020, but employment in the Retail and Hospitality industries remained below 2019 levels through 2022.
- Projected changes to frequency and severity due to industry mix of employment are low through 2025.
Annual California Unemployment Rate
- While unemployment is forecast to increase in 2023 and 2024, it is projected to remain at historically low levels with small annual changes.
- WCIRB research has found that increases in unemployment are correlated with decreases in indemnity claim frequency.
- Given the current forecast of changes in the unemployment rate are small, they would also have a small impact on changes in indemnity claim frequency.
Distribution of Employment by Industry
- In 2020, the number of workers employed in the Hospitality industry decreased dramatically, from 9.5% to 7.7% of the statewide workforce. Hospitality employment is forecast to rebound and exceed the 2019 share by 2024.
- The share of employment in Retail has decreased from 9.2% in 2019 to 8.9% in 2022 and is forecast to decrease to 8.3% in 2025.
- The share of employment in other key industries has remained relatively stable since 2019.
Change in Frequency, Severity and Pure Premium Due to Industrial Mix
- In 2020, claim frequency and severity both increased due to the mix of employment by industry.
- The increase in severity was driven by the decrease in hospitality employment as claims filed by workers in this industry have lower average severity.
- Forecast changes in frequency and severity due to industry mix are low and offset each other for a flat impact on pure premium through 2025.
The full report is available in the Research section of the WCIRB website and here: CA WCIRB: Impact of Economic Changes on California Workers’ Compensation
WCIRB Research Forum Webinar
Members of the WCIRB Actuarial Research team will host a free webinar to discuss this new report on Wednesday, December 6, 2023 from 10:00 – 11:00 AM PT
Source: CA WCIRB