Dec 21, 2017

NCCI 2018 WC loss-cost decrease of 13.3 percent approved

The New Hampshire Insurance Department approved the original workers’ compensation voluntary loss-cost filing made by the National Council on Compensation Insurance, consisting of an overall 13.3 percent decrease. In addition, a decrease of 10.3 percent of the overall assigned risk rates was approved as filed. These loss costs and rates will take effect Monday, Jan. 1, 2018.

The NCCI made the following key observations that impact loss costs and rates in New Hampshire:

• After five years of growth, premium is flat in the most recent year.
• The combined ratio continues to show favorable results.
• Frequency declined again at the latest point.
• Medical and indemnity severity are increasing modestly.

Rating components

Components of the -13.3 percent loss-cost reduction include changes in: 1. experience at -10 percent; 2. trend at -4 percent; 3. benefits at +0.1 percent; and 4. loss-based expenses at +0.2 percent. Also, the overall voluntary loss-cost change can be broken down by industry sector as follows: manufacturing (-15.4 percent); contracting (-15.1 percent); office and clerical (-13.7 percent); goods and services (-13.1 percent); and miscellaneous (-8.3 percent). Keep in mind that the loss costs and rates for individual classifications may vary significantly. These are available to PIA members (QS28025) in the QuickSource library.

Terrorism/catastrophe

The terrorism loss cost is reduced from 0.02 to 0.005 and the terrorism assigned risk rate is reduced from 0.02 to 0.01. The catastrophe (other than Certified Acts of Terrorism) loss cost and assigned risk rate remains at 0.01.

Maximum/minimum payroll

You will notice that the maximum/minimum payroll for executive officers and limited liability company members increases from $4,000/$450 to $4,100/$500. The maximum/minimum payroll for executive officers of an unincorporated association increases from $2,000/$225 to $2,100/$250. Also, the premium basis for a sole proprietor and partners increases from $26,100 to $26,700.

Split point

Last year was the third and final year of the split-point transition period for experience rating, bringing it to $15,500. In each subsequent loss-cost filing, the split point will be indexed by the countrywide severity change. The split point remains at $16,500 for 2018.

Assigned risk plan

The 2018 assigned risk loss-cost multiplier increases to 1.551 from the 2017 multiplier of 1.499. Insurers having an approved LCM higher than the plan must advise policyholders that a lower premium is available in the Plan. Market share in the plan has remained relatively stable, at 8.9 percent in 2016.

The expense constant remains at $160 and the maximum minimum premium of $1,000 does not change. And, there is no change in the flat differential, which reflects the general experience of risks in this market. It remains at 18 percent. Also, the Assigned Risk Adjustment Program (maximum surcharge on actual claims) remains at 25 percent.