Premiums written fell sharply from the second quarter of 2020 due to the economic slowdown resulting from the pandemic, according to a report published on Tuesday.
The Workers’ Compensation Insurance Rating Bureau of California report shows that a slight decrease in written premiums for 2021 was driven by the continued decline in insurance rates offsetting the growth in employers’ payrolls.
“Despite the continued decline in insurers’ prices, premiums written for the first three quarters of 2022 are 15% higher than those for the same period of 2021”, the WCIRB report States. “Much of the increase is due to higher employee salaries and the continued economic recovery.”
According to the report, the premium on policies taken in the first nine months of 2022 was 7% higher than the premium on policies taken in the first nine months of 2021.
This development is explained by the increase in the wage bill of employers during the post-pandemic economic recovery. According to the WCIRB, most of the increase in written premiums for calendar year 2022 comes from adjustments to premiums received in previous years.
“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 from insurer audits,” the report said.
The average rate billed for the first three quarters of 2022 was 7% lower than in 2021, which was the lowest in decades.
“The average decline in insurers’ rates has moderated over the past two years,” the report said. “The average of the advisory pure premium rates approved as of September 1, 2022 was unchanged from the average of the existing rates.”
This followed a period of 11 consecutive declines in pure and advisory premium rates that totaled more than 50%, according to the WCIRB.
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