Reflecting the California workers' comp market's continuing improvement, the average statewide insurer rate per $100/payroll for policies written in the third quarter—excluding deductible credits--is $4.42. This is almost 18 percent below the rates charged in the first 6 months of 2005 and 32 percent below the average rate charged for the second six months of 2003, according to the Workers' Compensation Insurance Rating Bureau.

But written premium reported for the first nine months of 2005 was also down to $16.3 billion, 10 percent below the written premium reported for the first nine months of 2004.

Most carriers lowered rates significantly for July 2005 and plan to do so January 2006, but the industry and the California Department of Insurance expect a slow down in rate decreases after January, as most of the reforms have filtered through the system.

Reflecting on the estimate impact of the major reform bills including the SB 899, accident year losses for 2004 are projected by the Bureau to be $8.4 billion. This represents a decrease in estimated losses of approximately 24 percent from the ultimate losses currently projected for accident year 2003 and 33 percent from the ultimate losses currently projected for accident year 2002.

In addition, after considering the estimated impact of the reforms on unpaid losses, based on September 30, 2005 experience, the Bureau projects ultimate accident year loss ratios of 139%, 124%, 107%, 85%, 54% and 36% for the 1999, 2000, 2001, 2002, 2003 and 2004 accident years, respectively

On unpaid losses, according to the Bureau, the ultimate accident year 2004 combined loss and expense ratio is estimated to be 59%. This estimate reflects a continuing sharp decline in accident year combined ratios from the 1999 peak value of 184%.

The average cost of a 2004 indemnity--$41,000--claim is also down, 10 percent lower than in 2003. But it's still twice as much as a 1993 indemnity claim, although medical severity has declined over the last two years, according to Bureau data.

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