California Workers Comp Premiums Soar 11%

It’s still a far cry from the workers’ comp crisis of a decade ago, but workers’ comp premium volume soared nearly 11 percent last year, the third year in a row the tally has jumped by more than $1 billion.
The total climbed to more than $11.4 billion last year, according to the California Workers’ Compensation Institute, which is up $4.5 billion from the industry 10-year low in 2009, but still $4.7 billion less than 2004’s historic high of $16.1 billion 11 years ago.

The premium total for California workers’ comp insurers jumped $1.1 billion in calendar 2014, the institute said, citing market data compiled by the National Association of Insurance Commissioners and posted by the California Department of Insurance.

That increase reflected both growth in average premium rates as well as in covered payroll, as California’s economy continued its recent return to health following the deep recession starting in 2008.

Emergency reforms in the early 2000s and other factors, including the lingering recession, caused premium volume to sink dramatically between the 2004 high and 2009 low of just $6.9 billion. But that’s turned around significantly, starting in 2010 and escalating in recent years.

Volume at the San Francisco-based quasi-public State Compensation Insurance Fundskyrocketed more than 37 percent last year, to nearly $1.53 billion, while the Berkshire Hathaway Group, the state’s No. 2 comp insurer by premium volume, posted nearly $1.14 billion in 2014 premium volume, up 16.4 percent.

The State Fund saw volume rise dramatically during the comp crisis, as private carriers fled the niche, and then drop precipitously when reforms lured them back.

The whipsaw trends battered the San Francisco insurer, and as recently as last summer it was still trying to right the ship, bringing on Vernon Steinerin June 2014 to replace former CEO Tom Rowe, who left office in late 2013 with no explanation.

Jennifer Vargen, a State Fund spokeswoman and executive vice president, said most of that premium growth came from writing more business, as opposed to increasing rates.

Seven of the state’s top 10 comp insurers saw premium volume jump last year, while three (Travelers Group, Hartford Fire & Casualty Group and Fairfax Financial Group) saw volume dip slightly.

Those top 10 companies accounted for 63.3 percent of total premium volume last year — nearly two-thirds of the $11.4 billion total — up from 60.8 percent the previous year.

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