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60 th Annual All Industry Day California Workers’ Compensation Update

60 th Annual All Industry Day California Workers’ Compensation Update. Presented by: Dave Bellusci, FCAS, MAAA WCIRB of California Golden Gate Chapter of CPCU March 6, 2009 San Francisco, California. Overview. Premiums, Market Shares and Rates Benefit Costs Industry Results

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60 th Annual All Industry Day California Workers’ Compensation Update

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  1. 60th Annual All Industry DayCalifornia Workers’ Compensation Update Presented by: Dave Bellusci, FCAS, MAAA WCIRB of California Golden Gate Chapter of CPCU March 6, 2009 San Francisco, California

  2. Overview • Premiums, Market Shares and Rates • Benefit Costs • Industry Results • Current Topics

  3. Written Premium Gross of Deductibles $ Billion As of September 30, 2008 . Estimated Calendar Year

  4. Average Insurer Rate Per $100 of Payroll As of September 30, 2008 Policy Year .

  5. Rate Comparison Based on Oregon Studies California vs. National Median Average Rate Estimated

  6. State Fund Market Share (Based on Written Premium Gross of Deductible Credits) % Preliminary Calendar Year

  7. Overview • Premiums, Market Shares and Rates • Benefit Costs • Industry Results • Current Topics

  8. Estimated Ultimate Losses by Accident Year $ Billions As of September 30, 2008 Accident Year

  9. Estimated Ultimate Indemnity Claim Counts Per 1,000 Full-Time Employee Equivalents As of September 30, 2008 Accident Year

  10. Change in Indemnity Claim FrequencyCalifornia vs. NCCI States % As of September 30, 2008 9 Months NCCI estimates are based on May 8, 2008 State of the Line Presentation (2007 estimate is preliminary).

  11. Estimated Ultimate Loss per Indemnity Claim As of September 30, 2008 % Change Accident Year

  12. Overview • Premiums, Market Shares and Rates • Benefit Costs • Industry Results • Current Topics

  13. Accident Year Combined Loss and Expense Ratios % As of September 30, 2008 186 178 169 157 143 139 128 114 . 95 87 79 67 57 53 Accident Year

  14. Return on Net WorthBased on NAIC Report on Profitability by Line & State % Calendar Year 10-Year Arithmetic Average Return California Workers’ Compensation 2.9% Fortune Magazine – All Industry 13.6%

  15. Overview • Premiums, Market Shares and Rates • Benefit Costs • Industry Results • Current Topics

  16. Current Topics WCIRB Filings • WCIRB 1/1/09 Filing • WCIRB proposed: +16% increase in pure premium rates • CDI Staff recommended: +9.4% • Commissioner approved: +5% • Key difference: projected medical inflation • Mid-Year Filing Likely • Continued medical inflation • Recent WCAB decisions on permanent disability rating

  17. Current Topics Impact of Recession • Premiums • Declining employment • Lower wage inflation • Losses • Reduced employment generally dampens claim frequency • Severity impact uncertain • Investment Returns Down

  18. Current Topics Experience Rating Task Force • Objective to Review How Well Experience Rating Plan Meets its Principal Objectives • Includes Representatives of Insurers, Employers, Labor, Producers, CDI & WCIRB • Report Submitted to CDI in July 2008 • Principal Recommendations • Single primary/excess split plan • Update rating values with most current available data • Simplify plan formula • Revised experience rating worksheet • Broad educational outreach program • Implementation Plan

  19. 60th Annual All Industry DayCalifornia Workers’ Compensation Update Presented by: Dave Bellusci, FCAS, MAAA WCIRB of California Golden Gate Chapter of CPCU March 6, 2009 San Francisco, California

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