New figures show claims frequency is down 13 percent in 2004 for California insureds. The decline continues the trend begun in the early nineties and has improved thanks to the workers' comp reforms, according to the California Workers' Compensation Institute.

This record decline means savings for employers, but continued declines in frequency and rates hinges on what judges, regulators, and legislatures decide to do with California workers' comp this year. Tweaking has already begun on the new Permanent Disability Rating Schedule, and there may be more to come.

After surveying 24 insurers that wrote more than three quarters of California's direct written premium in calendar year 2004, CWCI took into account 37.8 medical-only claims and 21.4 indemnity claims per $1 million of adjusted earned premium in 2004. Comparing those figures to the survey done last calendar year, this year shows the state's aggregate insured claim frequency rate per $1 million of adjusted earned premium was down 13 percent from 68.1 percent in 2003 to 59.3 in 2004.

CWCI says this is the lowest level ever recorded by one of its surveys. CWCI has been doing frequency surveys since at least 1988.

California workers' comp frequency has dropped nearly 60 percent in 15 years. Medical only claims declined by 9.1 percent while indemnity claims were down 18.8 percent in 2004. The larger decline in indemnity is the result of overall claim frequency distribution. The medical-only claim frequency rate is comprised of 63.8 percent of California's insured claim frequency in 2004 up from 61.6 in 2003. The indemnity rate fell from 38.4 percent of overall claim frequency in 2003 to 36.2 percent in 2004.

Self insured employers who had a calendar-year unadjusted payroll totaling $13.6 billion in 2004 also saw a decline in aggregate claim frequency of 17 percent. Self insured employers reported 1.81 new claims—1.04 medical onlys and .77 new indemnity claims—per $1 million of payroll, according to CWCI.

In addition to frequency, claims costs have also started to decline thanks the recent reforms along with pure premium rates. CWCI points out that with claims frequency at a record low, additional rate decreases will depend on what changes state regulators, the courts or the legislature make to the current reforms.

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