Report Keys on Impacts of Economic Changes on California Workers’ Comp

Projected changes to California workers’ comp claims frequency and severity due to industry mix of employment are negligible through 2026, while employment in most industries fully recovered from the initial pandemic related changes by the end of 2022, a new report from the Workers’ Compensation Insurance Rating Bureau of California shows.

WCIRB this week released an update to the Impact of Economic Changes on California Workers’ Compensation report.

The report shows that while employment in hospitality fully recovered in 2023, retail employment is expected to remain below 2019 levels until 2026. The report forecasts construction employment to grow moderately in 2024 and 2025 and slowly in 2026, similar to the overall growth.

Source: Workers’ Compensation Insurance Rating Bureau of California

Healthcare employment fell slightly in 2020, then rebounded in 2021. It is projected to grow modestly through 2026, according to WCRIB.

“Unemployment is forecast to increase slightly in 2024 and then decrease slightly, remaining at historically low levels,” the report shows. “WCIRB research has found that increases in unemployment are correlated with decreases in indemnity claim frequency. Given the current forecast of changes in the unemployment rate is small, there would also be a small impact on changes in indemnity claim frequency.”

Claim frequency rose substantially in 2021 due to the mix of employment by industry, an increase largely driven by the return of hospitality employment, but modest industry mix impacts on claim frequency and severity are projected to continue and offset each other, yielding negligible pure premium impacts through 2026, according to WCIRB.

Wages overall are forecast to increase strongly in 2024, then return to a lower increase in 2025 and 2026.

Related:

Topics California Workers' Compensation

Was this article valuable?