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1
Current Issue in California Workers Compensation
Guy A. Avagliano, FCAS, MAAA September 15, 2011
2
Outline
- A Brief History
- Loss Ratios
- Rates
- Frequency
- Severity
- Loss Development
- Outlook
Current Issue in California Workers Compensation Guy A. Avagliano, - - PowerPoint PPT Presentation
Current Issue in California Workers Compensation Guy A. Avagliano, - - PowerPoint PPT Presentation
Current Issue in California Workers Compensation Guy A. Avagliano, FCAS, MAAA September 15, 2011 1 Outline A Brief History Loss Ratios Rates Frequency Severity Loss Development Outlook 2 A Brief History Source:
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SLIDE 3
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A Brief History
Source: WCIRB
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A Brief History
- 1989-91: High Loss Ratios
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Minimum Rate Law
–
Rampant Fraud
–
Medical Mills
–
Stress Claims
–
Post Termination Claims
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A Brief History
- 1989-91: High Loss Ratios
- 1992-94: Low Loss Ratios
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Effective Anti-Fraud Measures
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Health Insurers Enter Market
–
Low Medical Inflation
–
High Profitability
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A Brief History
- 1989-91: High Loss Ratios
- 1992-94: Low Loss Ratios
- 1995-99: Very High Loss Ratios
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Benefit Increases (AB 749)
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Open Rating – Deep Discounts in Pricing
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Inadequate Pure Premiums
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Inexpensive Reinsurance
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High Severity Trends, Especially for Medical
–
Minniear
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A Brief History
- 1989-91: High Loss Ratios
- 1992-94: Low Loss Ratios
- 1995-99: Very High Loss Ratios
- 2000-03: Improving Loss Ratios
–
Rate Increases (Advisory)
–
Rate Increases (Effective)
–
Major Legislative Reforms
SLIDE 8
8
A Brief History
- 1989-91: High Loss Ratios
- 1992-94: Low Loss Ratios
- 1995-99: Very High Loss Ratios
- 2000-03: Improving Loss Ratios
- 2004-05: Very Low Loss Ratios
–
Rate Decreases (But Less Than Indications)
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Better Than Anticipated Reform Impact
SLIDE 9
9
A Brief History
- 1989-91: High Loss Ratios
- 1992-94: Low Loss Ratios
- 1995-99: Very High Loss Ratios
- 2000-03: Improving Loss Ratios
- 2004-05: Very Low Loss Ratios
- 2006-10: Increasing Loss Ratios
–
Higher Severity
–
Moderation of Frequency Decreases
–
Flat or Decreasing Effective Rates
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A Brief History
Source: WCIRB
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A Brief History
Source: WCIRB
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Filed Pure Premium Changes
Effective Date WCIRB Filed CDI Approved 1/1/08 5.2% 0.0% 1/1/09 16.0% 5.0% 7/1/09 23.7% 0.0% 1/1/10 22.8% 0.0% 7/1/10 no filing n/a 1/1/11 27.7% 0.0% 7/1/11 39.8% (info only) n/a 1/1/12
- 1.8%
pending
Sources: WCIRB, CDI
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Market Rates by Policy Year
September 15, 2011
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Change in Indemnity Frequency
Source: WCIRB
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Severity (per Indemnity Claim)
Source: WCIRB (as of 3/31/11)
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Change in On-Level Indemnity Severity
Source: WCIRB (as of 6/30/11)
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Change in On-Level Medical Severity
Source: WCIRB (as of 6/30/11)
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Incurred Development (18-30)
September 15, 2011
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Paid Development (18-30)
September 15, 2011
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Reported Indemnity Claims (6-18)
September 15, 2011
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Development: Accident Year 1994
Source: WCIRB
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Development: Accident Year 1995
Source: WCIRB
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Development: Accident Year 1996
Source: WCIRB
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Development: Accident Year 1997
Source: WCIRB
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Development: Accident Year 1998
Source: WCIRB
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Development: Accident Year 1999
Source: WCIRB
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Development: Accident Year 2000
Source: WCIRB
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Development: Accident Year 2001
Source: WCIRB
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Development: Accident Year 2002
Source: WCIRB
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Development: Accident Year 2003
Source: WCIRB
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Development: Accident Year 2004
Source: WCIRB
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Development: Accident Year 2005
Source: WCIRB
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Development: Accident Year 2006
Source: WCIRB
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Development: Accident Years 2008-10 (Indemnity)
September 15, 2011