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California Workers Compensation: $8 Billion Reasons to Attend

California Workers Compensation: $8 Billion Reasons to Attend. Guy Avagliano Milliman, Inc. September 14, 2004. A Brief History. 1992-94: Low Loss Ratios Anti-fraud measures, low medical inflation. WCIRB Ultimate Loss Ratios @ 3/04. A Brief History. 1992-94: Low Loss Ratios

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California Workers Compensation: $8 Billion Reasons to Attend

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  1. California Workers Compensation:$8 Billion Reasons to Attend Guy Avagliano Milliman, Inc. September 14, 2004

  2. A Brief History • 1992-94: Low Loss Ratios • Anti-fraud measures, low medical inflation

  3. WCIRB Ultimate Loss Ratios @ 3/04 Source: WCIRB

  4. A Brief History • 1992-94: Low Loss Ratios • Anti-fraud measures, low medical inflation • 1995-99: Increasing Loss Ratios • Deep discounts off inadequate pure premiums, cheap reinsurance, high severity

  5. WCIRB Ultimate Loss Ratios @ 3/04 Source: WCIRB

  6. A Brief History • 1992-94: Low Loss Ratios • Anti-fraud measures, low medical inflation • 1995-99: Increasing Loss Ratios • Deep discounts off inadequate pure premiums, cheap reinsurance, high severity • 2000-03: Improving Loss Ratios • Rate increases (filed and effective), major legislative changes

  7. WCIRB Ultimate Loss Ratios @ 3/04 Source: WCIRB

  8. WCIRB vs. Carrier ULR @ 3/04 Source: WCIRB

  9. WCIRB Indicated Deficiency ($B) Source: WCIRB

  10. Development: Accident Year 1994 Source: WCIRB

  11. Development: Accident Year 1995 Source: WCIRB

  12. Development: Accident Year 1996 Source: WCIRB

  13. Development: Accident Year 1997 Source: WCIRB

  14. Development: Accident Year 1998 Source: WCIRB

  15. Development: Accident Year 1999 Source: WCIRB

  16. Development: Accident Year 2000 Source: WCIRB

  17. Development: Accident Year 2001 Source: WCIRB

  18. Development: Accident Year 2002 Source: WCIRB

  19. Development: Accident Year 2003 Source: WCIRB

  20. Retrospective Pure Premium Adequacy Source: WCIRB

  21. Effective LCM Source: WCIRB

  22. Average Rate per $100 of Payroll Source: WCIRB

  23. On-Level Frequency Source: WCIRB

  24. Indemnity Severity per Indemnity Claim Source: WCIRB

  25. Medical Severity per Indemnity Claim Source: WCIRB

  26. Indemnity Development (15-27) Source: WCIRB

  27. Medical Development (15-27) Source: WCIRB

  28. Legislation: AB 749 • Effective 2003 through 2006 • Similar legislation vetoed three times • Significant benefit increases • Indexing of some benefits • Partial Repeal of Primary Treating Physician Presumption

  29. Legislation: AB 227 & SB 228 • Effective 1/1/04 (mostly) • Fee Schedule Changes • Physician, pharmaceuticals • Inpatient, outpatient • Medical Utilization • Utilization standards (ACOEM, CHSWC) • Hard caps on chiropractors, physical therapists • Voc rehab replaced with education vouchers

  30. Legislation: SB 899 • Effective 4/19/04 & 1/1/05 (maybe) • TD caps (104/240 weeks) • PD (weeks, two-tiers, schedule?) • Apportionment • Utilization Guidelines • Medical Networks • 5814 Penalties

  31. Legislation: Impact on Policy Year 2005 Source: WCIRB

  32. Retrospective Savings on 12/03 Reserves Source: WCIRB

  33. Medical Paid Development Factors Source: WCIRB

  34. Medical Paid Development Factors Source: WCIRB

  35. Paid Incremental Medical Severity Source: WCIRB

  36. Paid Incremental Medical Severity Source: WCIRB

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