Written premium declined sharply beginning in the second quarter of 2020 due to the economic downturn resulting from the pandemic, according to a report out on Tuesday.
The report from the Workers’ Compensation Insurance Rating Bureau of California shows a modest decrease in written premium for 2021 was driven by continued insurer rate decreases offsetting growth in employer payroll.
“Despite continued declines in insurer rates, written premium for the first three quarters of 2022 is 15% above that for the same period of 2021,” the WCIRB report states. “Much of the increase is being driven by higher employee wage levels and the continued economic recovery.”
Premium on policies incepting in the first nine months 2022 was 7% higher than premium on policies incepting in the first nine months of 2021, according to the report.
This was driven by increases in employer payroll during the post-pandemic economic recovery. The larger share of the increase in calendar year 2022 written premium came from adjustments to premiums incepting in prior years, according to the WCIRB.
“This is largely due to a lower amount of premium adjustments in calendar year 2021, as the pandemic resulted in a relative increase in return premiums coming from insurer audits,” the report states.
The average charged rate for the first three quarters of 2022 was 7% below 2021, which was the lowest in decades.
“Average insurer rate declines have moderated in the last two years,” the report states. “The average of the approved September 1, 2022 advisory pure premium rates was unchanged from the average of the existing rates.”
That followed a period of 11 straight advisory pure premium rate decreases which totaled over 50%, according to the WCIRB.
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