Iowa. Law Only Rate Filing Voluntary and Assigned Risk Markets Proposed Effective July 1, 2017

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1 Iowa LawOnlyRateFilingVoluntaryand AssignedRiskMarkets ProposedEffectiveJuly1,2017

2 CarlaTownsend StateRelationsExecutive RegulatoryServicesDivision (P) (F) GravoisRoad,Suite310 St.Louis,MO NationalCouncilon CompensationInsurance May1,2017 HonorableDougOmmen InsuranceCommissioner IowaInsuranceDivision 601LocustSt.,4 th Floor DesMoines,IA Re: IowaWorkersCompensationLawOnlyRatesandRatingValuesFiling, ProposedEffectiveJuly1,2017 DearCommissionerOmmen: InaccordancewiththeapplicablestatutesandregulationsofthestateofIowa,wearefilingforyour considerationandapprovaladvisoryprospectiveratesandratingvaluesfortheiowavoluntaryandassigned riskmarketstobecomeeffectivejuly1,2017fornewandrenewalpolicies. Thisfilingproposesanoveralldecreaseof3.9%involuntaryandinassignedriskrates.Theadvisory prospectiveratesofthevoluntarymarketareusedasabasisfortheratesintheassignedriskmarket. ThisproposeddecreaseresultsfromtheestimatedimpactofenactedIowaHouseFile518,applicableto injuriesoccurringonorafterjuly1,2017. Thisfilingismadeexclusivelyonbehalfofthecompaniesthathavegivenvalidconsiderationfortheexpress purposeoffulfillingregulatoryrateorpurepremiumfilingrequirementsandotherprivateuseofthis information. Intheenclosedappendixisalistofcompanieswhich,asofthetimethisfilingissubmitted,areeligibleto referencethisinformation.theinclusionofacompanyonthislistmerelyindicatesthatthecompany,orthe grouptowhichitbelongs,isaffiliatedwithncciinthisstate,orhaslicensedthisinformationasanon affiliate,andisnotintendedtoindicatewhetherthecompanyiscurrentlywritingbusinessoriseven licensedtowritebusinessinthisstate.

3 601LocustSt.,4thFloor DesMoines,IA NationalCouncilon CompensationInsurance TheHonorableDougOmmen Page2 May1,2017 Asalways,ifyoushouldhaveanyquestionsorneedadditionalinformation,pleasedonothesitateto contacttonydidonatoat(561) ormeat(314) Respectfullysubmitted, NationalCouncilonCompensationInsurance,Inc. FilingPreparedby: CarlaTownsend StateRelationsExecutive RegulatoryServicesDivision TonyDiDonato DirectorandSeniorActuary ActuarialandEconomicServices

4 Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved These materials are comprised of NCCI actuarial judgment and proprietary and confidential information which are valuable assets of NCCI and are protected by copyright and other intellectual property laws. The uses of these materials are governed by a separate contractual agreement between NCCI and its licensees such as an affiliation agreement between NCCI and an end user. Unless expressly authorized by NCCI, you may not copy, create derivative works (by way of example, create or supplement your own works or other materials), display, perform, or use the materials, in whole or in part, in any media. Such actions taken by you, or by your direction, may be in violation of federal copyright and other commercial laws. NCCI does not permit or agree to such use of its materials. In the event such use is contemplated or desired, please contact NCCI's Legal Department for permission. NCCI MAKES NO REPRESENTATIONS OR WARRANTIES RELATING TO THESE MATERIALS, INCLUDING ANY EXPRESS, STATUTORY OR IMPLIED WARRANTIES INCLUDING THE IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ADDITIONALLY, AUTHORIZED END USERS ASSUME RESPONSIBILITY FOR THE USE OF, AND FOR ANY AND ALL RESULTS DERIVED OR OBTAINED THROUGH THE USE OF SUCH MATERIALS.

5 IOWA WORKERS COMPENSATION FILING JULY 1, 2017 Actuarial Certification I, Tony DiDonato, am a Director and Senior Actuary for the National Council on Compensation Insurance, Inc. I am a Fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries, and I meet the Qualification Standards of the American Academy of Actuaries to provide the actuarial report contained herein. The information contained in this report has been prepared under my direction in accordance with applicable Actuarial Standards of Practice as promulgated by the Actuarial Standards Board. The Actuarial Standards Board is vested by the U.S.-based actuarial organizations with the responsibility for promulgating Actuarial Standards of Practice for actuaries providing professional services in the United States. Each of these organizations requires its members, through its Code of Professional Conduct, to observe the Actuarial Standards of Practice when practicing in the United States. Tony DiDonato Director and Senior Actuary Actuarial and Economic Services Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

6 IOWA WORKERS COMPENSATION FILING JULY 1, 2017 Table of Contents Summary of Proposed Changes Exhibit I: Analysis of House File 518 Exhibit II: Exhibit III: Proposed Voluntary Market Advisory Rates and Rating Values Proposed Assigned Risk Rates and Rating Values NCCI Key Contacts Appendix Affiliate List Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

7 IOWA WORKERS COMPENSATION FILING JULY 1, 2017 SUMMARY OF PROPOSED CHANGES Proposed Effective Date July 1, 2017 I. Industrial Classifications Overall Proposed Change in Rate Level New and Renewal Policies -3.9% Overall Proposed Change in Assigned Risk Rate Level New and Renewal Policies -3.9% By Component Overall Rate Level Change in Voluntary Market -3.9% Change in Assigned Risk Differential 0.0% Overall -3.9% Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

8 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 NCCIestimatesthatenactedIowaHouseFile518(HF518)willimpactoverallworkers compensation(wc)costsiniowaby3.9%.severalprovisionsofhf518wereexplicitlyor implicitlyconsideredinthisestimate.theimpactofotherprovisionsthatcouldnotbe objectivelyquantifiedwillbereflectedinfuturencciratefilingsiniowa. TheeffectivedateofHF518isJuly1,2017.Withtheexceptionofthecommutationprovisionsin 85.45,therevisionscontainedinHF518applyprospectively(i.e.,toinjuriesoccurringonor afterjuly1,2017). SummaryandActuarialAnalysisofMoreNotableProvisionsofHF (2)(0n):DurationofBenefitsforWorkerswithPermanentPartialDisability(PPD) ShoulderInjuries Currently,aninjurytotheshoulder,ortheportionofthearmdirectlybelowit,iscompensatedas anonscheduledppdinjury.hf518modifiestheiowastatutetocompensateappdinjurytothe shoulderasascheduledinjury,basedon400weekstimesthepercentageoffunctional impairment.thisreplacesthecurrentdeterminationof500weekstimestheindustrialdisability, whichincludesanassessmentoflossofearningcapacity. Twofactorsareneededtoestimatethechangeinaveragebenefitduration:thechangein maximumnumberofweeks,whichisequalto20.0%(=400/500 1),andthechangeinthe averagepercentagethatistobeappliedtothemaximumnumberofweeks. Changingthebenefitforshoulderinjuriesfromunscheduledtoscheduledmeansthattheinjured worker sindustrialdisabilitywillnolongerbeadeterminantforbenefits onlytheirfunctional impairmentwillbeconsidered.therelianceononlyfunctionalimpairment,asopposedtoalso consideringlossofearningcapacity,isexpectedtoresultinalowerppdpercentage,onaverage. TheIowaLegislativeServicesAgency(LSA)producedaFiscalNote 1 regardingtheestimatedimpact ofthischangeonstateemployeeswiththesetypesofinjuries.lsaestimatedanimpactof68%(= (10%x400)/(25%x500) 1),wherethe10%and25%areestimatesoftheaveragefunctional impairmentandindustrialdisabilityratingsforstateemployeeswithshoulderinjuries. Whilethe10%and25%figuresarebasedonarelativelysmallsampleofStateemployees,who mayormaynotberepresentativeoftheaverageemployeeiniowa,supplementalinformation gatheredfromiowastakeholdersindicatedthattheseestimates,orthepercentagechange, 1 thelsa. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

9 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 appearreasonable 2.Itisnotedthattheremaybeconsiderableupwardpressureonthefunctional impairmentpercentage,whichbecomesmoreimportantunderhf518forthesetypesofinjuries, duetotheabilityoftheinjuredworkertoseekanindependentmedicalexamination(ime)per 85.39toobtainahigherimpairmentassessment.Asaresult,theanticipatedchangeof60%(= 10%/25%1.0)inthepercentageappliedtothemaximumnumberofweeksmaynotberealized. BesidestheabilityoftheinjuredworkertoseekanIMEasnotedabove,anewvocationaltraining benefitisalsoexpectedtooffsetsomeoftheexpectedreductioninfutureppdshoulderinjury awards(seebelow).however,ncciappliedthefull60%reductiontothemaximumnumberof weeksforshoulderinjuriesinestimatingtheimpactofthisprovision,implicitlytakinginto accountthepotentialeffectofseveralotherprovisionsofhf518 mostprominently,the expecteddecreaseinbenefitsfromtheuseoffunctionalimpairmentindeterminingthenumber ofweeksofppdforunscheduledinjurieswheretheemployeereturnsorisofferedworkattheir preinjuryorgreatersalary. Altogether,NCCIestimatesthatPPDinjurycostswilldecreaseby12.2%.InIowa,PPDinjurycosts areestimatedtomakeup72.3%ofindemnitybenefitcosts,andindemnitybenefitscostscomprise approximately43.8%oftotalbenefits.asaresult,ncciestimatesthattheprovisionsofhf518 affectingppdindemnitybenefitcostswillimpactoverallsystemcostsinthestateby3.9%(= 12.2%x72.3%x43.8%).SeeExhibitIBfordetailsofthiscalculation :VocationalTrainingforWorkerswithPPDShoulderInjuries Asnotedabove,thenewvocationaltrainingbenefitforworkerswithscheduledPPDshoulder injuriesisexpectedtooffsetsomeoftheexpectedreductioninfutureppdshoulderinjuryawards. Currently, 85.70oftheIowastatutesprovidesanadditional$100weeklypaymentwhilean injuredworkerisactivelyparticipatinginvocationalretraining;thesebenefitsareavailableforup to13weeks,withthepossibilityofanextensionforanother13weeks.hf518establishesanew vocationaltrainingprogramforemployeeswithscheduledppdshoulderinjurieswhocannotbe gainfullyemployedbecauseofsuchdisability.theprogramwillinvolveanevaluationofthe employeeandattendanceatacommunitycollegetoearnanassociatedegreeorcertificate.the employeewillbeentitledtoupto$15,000fortuition,fees,andsupplies. UnderHF518,thecurrentmaximumpaymentof$2,600forvocationalretrainingcouldincreaseby upto$15,000foreachppdshoulderinjurywheretheemployeecannotbegainfullyemployed. Theexpectedamountofexpendituresforeachsuchcaseandthenumberofsuchcasesis unknown,butisimplicitlyreflectedinthedeterminationoftheselectedreductioninppd 2 Thepercentagechangewasindicatedtobereasonablebasedonfunctionalimpairmenttothebodyasawholeincomparisonto industrialdisability.iffuturefunctionalimpairmentforashoulderinjuryisbasedontheupperextremity,asopposedtothebodyas awhole,thepercentagechangemaybesmallerthantheestimated60%. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

10 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 disability(60%)forshoulderinjuries,detailedinexhibitib.notethatthesenewvocational trainingbenefitsmayresultinhighercompromisesettlementamounts,eveniftheclaimantdoes notactivelyparticipateinthevocationaltrainingprogramorisultimatelyabletoreturntogainful employment (2)(u):DeterminationofReductioninEarningCapacity Theestimatedreductionfromthechangeinhowearningcapacityisdeterminedisexpectedto placedownwardpressureonwccostsiniowa (2)(u)addressesunscheduledPPDbenefitsandstates, thecompensationshallbepaid duringthenumberofweeksinrelationtofivehundredweeksasthereductionintheemployee s earningcapacitycausedbythedisabilitybearsinrelationtotheearningcapacitythatthe employeepossessedwhentheinjuryoccurred. Whilethestatutemerelymentions reductionintheemployee searningcapacity, thewebsiteof theiowadivisionofworkers CompensationoffersthisguidanceregardingPPDunscheduled injuries: Whenaninjuryresultsinapermanentdisabilitytoapartofthepersonthatisnotascheduled member,itisreferredtoasanindustrialdisabilitythatiscompensatedaccordingtothe percentthatthedisabilityreducedtheperson searningcapacity.factorstobeconsideredin determiningindustrialdisabilityare:anychangeintheemployee'searningscausedbythe injury;employee smedicalconditionpriortoinjury,immediatelyaftertheinjuryandpresently; thesitusoftheinjury;itsseverityandthelengthofhealingperiod;theworkexperienceofthe employeepriortotheinjury,aftertheinjuryandpotentialforrehabilitation;theemployees [sic]qualificationsintellectually,emotionally,andphysically;age;education;motivation; functionalimpairmentasaresultoftheinjury;lossofearningscausedbyajobtransferfor reasonsrelatedtotheinjury;andinabilitybecauseoftheinjurytoengageinemploymentfor whichtheemployeeisfitted.therearenospecificguidelinesthatindicatehoweachofthe factorsistobeconsidered. (Emphasisadded.) 3 Ofadditionalrelevanceto 85.34(2)(u)isanIowaSupremeCourtdecision 4 inwhichthecourt foundthatagemaynotbeconsideredwhencalculatingfuturewageloss. HF518requiresthatthedeterminationoflossofearningcapacityshalltakeintoaccountthe numberofadditionalyearstheemployeewasexpectedtoworkatthetimeoftheinjury.also, unscheduledcompensationwillbebasedonlyontheemployee sfunctionalimpairmentresulting SecondInjuryFundofIowav.Nelson,544N.W.2d258(Iowa1995) Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

11 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 fromtheinjury,andnotonlossofearningcapacity,iftheemployeereturnsorisofferedworkat theirpreinjuryorgreatersalary. Therequirementthatageshallbeconsideredinthedeterminationoflossofearningcapacity appearsaimedataddressingtheaforementionedsupremecourtdecision.subjectivityinthe calculationofunscheduledawardswouldlikelyremainsincehf518doesnotspecify: howtodeterminethenumberoffutureyearsofemploymentor howtomodifytheawardbaseduponthisinformation. Thelatterportionofthissection,whichspecifiesthatlossofearningcapacityistobebasedonthe employee sfunctionalimpairmentforunscheduledinjuriesinwhichtheemployeereturnsoris offeredworkattheirpreinjurysalaryorgreater,isexpectedtointroducemoreobjectivityinto thecalculationformostunscheduledppdawards.totheextentthataninjuredworkerreturnsor isofferedworkatorabovetheirpreinjurysalary,buthasalossofearningcapacity,thischange willsignificantlydecreasethenumberofweeksofcompensationavailableforsuchunscheduled injuries.themagnitudeofsuchareductioncannotbeobjectivelyquantified,butisimplicitly reflectedinthedeterminationoftheselectedpercentagereductioninppd(60%)forshoulder injuriesasdetailedinexhibitib. NotethatHF518alsoincludeslanguagestatingthatifanemployeewithanunscheduledPPD injuryreturnstowork,butissubsequentlyterminated,theemployeemayrequestreopening proceedingstodeterminetheappropriatereductionoflossofearningcapacitycausedbytheir injury.basedon 85.26,itwouldappearthatsuchareopeningrequestwouldneedtooccur withinthreeyearsofthelastpaymentofweeklybenefits,butthelanguagemayrequirefurther interpretation. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

12 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 HF518alsoincludesthechangesnotedbelow.Whiletheimpactsfromtheseprovisionsare expectedtoputdownwardpressureoncosts,suchcostimpactsarenotquantifiable,orare expectedtohavealimitedeffectonsystemcosts,andhavebeenimplicitlyconsideredinthe overallcostimpact (2):EmployeeIntoxication BurdenofProof Under 85.16(2),anemployercandenycompensabilityofaclaimiftheinjuredemployee s intoxicationorillegaldruguse,asshownbypositivetestresults 5,was asubstantialfactorin causingtheinjury. Currently,theburdenofproofisontheemployer. HF518createsapresumptionthattheemployeewasintoxicatedatthetimeoftheinjuryandthat theintoxicationwasasubstantialfactorincausingtheinjuryif atthetimeoftheinjuryor immediatelyfollowingtheinjury,theemployeehadpositivetestresultsreflectingthepresenceof alcohol,oranothernarcotic,depressant,stimulant,hallucinogenic,orhypnoticdrug... HF518strengthenstheabilityoftheemployertodenycompensationduetointoxicationby shiftingtheburdenofproofrequiredtotheemployeeifthereisapositivetestresult,andmay eliminatesomeclaimsfromtheiowawcsystemfromwhatwouldhavepreviouslybeen consideredcompensable,resultinginareductioninsystemcosts (3):OfferofLightDutyWork 85.33(3)addressesthesituationwhereatemporarilydisabledemployeeisofferedsuitablework whiletheyarecompensatedwithwcbenefits.iftheemployeerefusestoacceptthesuitablework offer,theymaybedeniedallbenefitsduringtheperiodofrefusal. HF518allowsforthesuitableworkoffertonotnecessarilybewiththepreinjuryemployer.In addition,thelocationofthesuitableworkoffermaybetheprincipalplaceofbusiness,evenfor employeeswhosedutiesinvolvetravelawayfromtheprincipalplaceofbusinessmorethanfifty percentofthetime.hf518alsoclarifiestheprocessbywhichtheemployercommunicatesthe offeroftemporaryworkandbywhichtheemployeemightrefuse,andtheconsequencesof refusal. ThissectionofHF518concerningthelocationofthesuitableworkofferappearsaimedat addressinganiowasupremecourtdecision 6 whichconcludedthatlightdutyworkattheofficeof atruckingcompanywasnotsuitableforatruckdriverwholived387milesaway.notethatthe definitionofwhatisdeemedtobesuitableemploymentmayresultinincreasedlitigation. 5 Positivetestresults appearstorefertothephrase, confirmedpositivetestresult, definedin 730.5(1)(b). 6 Nealv.AnnettHoldings814NW2d512(Iowa2012). Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

13 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile (2)&(2)(w):UseofAMAGuidesforPermanentImpairment InIowa,PPDbenefitscurrentlydonotbeginuntil terminationofthehealingperiod. In 85.34(1),healingperiodisdefinedasendingwhen theemployeehasreturnedtoworkoritis medicallyindicatedthatsignificantimprovementfromtheinjuryisnotanticipated. Also,per 85.34(2)(v),forscheduledPPDcasesinwhichthereisnottotalloss,thenumberofweekstobe paidaccordingtothescheduleismultipliedbythepercentageofimpairmentdetermined. HF518replaces terminationofthehealingperiod with whenitismedicallyindicatedthat maximummedicalimprovement[mmi]...hasbeenreached asthedateatwhichcompensation forppdbegins.italsoinsertstheamaguides 7 into 85.34attwoplacestodetermine theextent oflossorpercentageofpermanentimpairment (whendeterminingfunctionaldisabilityandnot lossofearningcapacity)andstatesthatlaytestimonyoragencyexpertiseshallnotbeutilizedin determininglossorpercentageofpermanentimpairment.undertheenactedlanguage,such determinationswouldlikelybemoreconsistentandpredictable,andisanticipatedtodecrease systemcoststosomeextent (2)(x):NoOverlapofPPD&PermanentTotalDisability(PTD) New 85.34(2)(x)terminatesPPDbenefitsonthedatethatPTDbegins thatis,anemployeemay notreceivecompensationforppdandptdatthesametime.thissectionofhf518islikelyaimed atreversingtheimpactofaniowasupremecourtdecision 9 whichconcludedthatnothingin 85.34preventedconcurrentbenefitsiftheinjuriesareseparate.Instancesofconcurrent permanentinjuriesarebelievedtobeinfrequentandthereforethisprovisionisanticipatedto haveaverylimitedeffectonoverallsystemcostsinthestate (3)(c)&(d):LimitationofPTDifReceivingCompensation 85.34(3)currentlyaddressesPTDbenefits,butissilentontheissueofprohibitingaPTDawardto someonewhoisstillworkinginsomecapacity.hf518disallowsptdbenefitsifanemployeeis receivinggrossearningsfromanyemployerorpaymentforservicesfromanysourcewhichare greaterthanorequalto50%ofthestatewideaverageweeklywage(saww);oriftheemployeeis receivingunemploymentcompensation.ncciestimatesthatindemnityptdbenefitcosts compriselessthan2%oftotalbenefitcostsiniowaandthereforethisprovisionisanticipatedto haveaverylimitedeffectonoverallsystemcostsinthestate. 7 IowacurrentlyusestheAMAGuides totheevaluationofpermanentimpairment,fifthedition(2001),andtherevisionsinthis sectionspecifythattheeditiontobeusediswhicheveronehasbeenadoptedbytheworkers compensationcommissioner. 8 Forexample,inEvensonv.Winnebago&SentryIns.Co.,881N.W.2d360(Iowa2016),twodoctorstestifiedthatEvensonhad3% and4%permanentimpairmenttohisleftarm,whilefamilymembersalsotestifiedthathehadsufferedbetween55%and80% impairment.afterconsideringallthetestimony,theiowasupremecourtheldthatevensonhadsuffered20%impairment. Notably,withHF518,suchtestimonywouldnotbeconsideredindetermininglossorpercentageofpermanentimpairment. 9 JBSSwiftv.Ochoa,888N.W.2d887(Iowa2016). Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

14 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile (7):Employer sliabilityforsuccessivedisabilities RegardingPPD,currentlyunder 85.34(7)(a), anemployerisfullyliableforcompensatingallof anemployee sdisabilitythatarisesoutofandinthecourseoftheemployee semploymentwith theemployer. Theemployermay,however,beabletoassignaportionofasuccessivedisability tothepreviousdisabilityif: Thepreviousdisabilitywascompensated;and Theinjuryistothesamebodypart;and Theinjuryiswiththesameemployer 10 Insuchcases,theemployerisonlyliablefortheportionofthesuccessivedisabilitythatcannotbe apportionedtoapreviousinjury.thisapportionmentcanbeoffsetunder 85.34(7)(b),fornon scheduledppdinjuriesif theemployeehasapreexistingdisabilitythatcausestheemployee s earningstobelessatthetimeofthepresentinjurythanifthepriorinjuryhadnotoccurred by subtractingthepercentagedecreaseintheemployee searningsfromthepercentageofthe successivedisabilitythattheemployercanapportiontothepreviousdisability. UnderHF518anemployerwillberesponsiblefor onlythatportionofanemployee sdisability thatarisesoutofandinthecourseoftheemployee semploymentwiththeemployerandthat relatestotheinjurythatservesasthebasisfortheemployee sclaimforcompensation With regardstosuccessivedisabilities, Anemployerisnotliableforcompensatinganemployee s preexistingdisability fromapriorinjurywiththeemployer,totheextentthattheemployee s preexistingdisabilityhasalreadybeencompensatedunderthischapter ThissectionofHF518affectstheamountofliabilitythatanemployerowestoaninjured employeesufferingasuccessivedisability.currently,anemployerisliableforcompensatingan injuredemployeeatthefulldisabilityratingforasuccessivedisability.however,theemployercan apportionapercentageofthesuccessivedisabilitytothepriordisabilitythataroseoutofandin thecourseofemploymentwiththesameemployer.forexample,ifanemployercompensateda priornonscheduledpermanentpartialinjuryatadisabilityratingof10%ofbodyasawhole (BAW)andasuccessivedisabilitywiththatsameemployerresultsinadisabilityratingof30% BAW,thentheemployermaybeabletoapportiontheinitial10%liability.Theemployerwouldbe liableforadisabilityratingofatleast20%baw(=30%10%)sincetheamountofliabilitythatthe employercanapportionmaybedecreasediftheemployee searningsarelessatthetimeofthe successivedisabilitythantheywerebeforethepriorinjury. 10 TheIowaSupremeCourtinRobertsDairyv.Billick,861N.W.2d814(Iowa2015),heldthat 85.34(7)providedamechanismfor apportioningliabilitywhensuccessiveinjuriesoccurwhileworkingforthesameemployerbutdidnotprescribeanymechanismfor apportioningthelossbetweenpresentandpreviousemployersthecourtalsonotedthatanemployercannotapportionliability perthe freshstartrule, definedas: [W]henanemployeewhohassustainedaworkrelatedinjuryresultinginpermanentpartial industrialdisabilitybeginsemploymentwithanewemployer,theemployeeenjoysarenewedearningcapacity. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

15 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 Thissectionappearstodecreasetheemployer sliabilitybyholdingtheemployerliableonlyfor theportionofthedisabilityratingthatresulteddirectlyfromtheeventoractivitythatcausedthe successivedisability.thatis,theemployer sliabilitywillrecognizetherolethatapriorworkplace disabilityplaysinasuccessiveinjury.forexample,ifasuccessivedisabilityreceivesaratingof30% BAWanditisestablishedthatapriorinjurycontributedto40%ofthesuccessivedisability,then theemployerwillonlybeliablefor18%=30%(30%x40%)inthisexample.the freshstartrule willnolongerapplytoapreviousunscheduledinjurywithadifferentemployer,justasitnolonger appliestoinjurieswiththesameemployer (1):Interest Currently,theinterestrateforcalculatingmoneydueonjudgmentsis10%.HF518changesthat ratetotherateononeyeartreasurybondsplus2%,asofthedateofinjury.fortheforeseeable future,thenewcalculationoftheinterestratewillresultinlowerinterestpayments AsofMarch17,2017,the1yeartreasuryratewas1.0%,sothecurrentinterestrateundertheproposedchangeto 535.3(1) wouldbe3.0%ratherthan10.0%.since1990,theaveragemonthlyratehasrangedfrom0.1%(september2011andthreemonths in2014)to8.4%(april1990). Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

16 IOWALAWONLYFILING ExhibitIA AnalysisofHouseFile518 SummaryofOtherProvisions HF518alsoincludesthechangesnotedbelow.Thecombinedimpactsfromtheseprovisionswill berealizedinfutureclaimsexperienceandreflectedinfuturencciratefilingsiniowa. Addsasentenceto 85.18whichclarifiesthat, Thissectiondoesnotcreateaprivatecauseof action. Addsclarificationtoboththenoticeandproceedingforbenefitssections( 85.23& 85.26) thatthe dateoftheoccurrenceoftheinjury meansthedatethattheemployeeknewor shouldhaveknownthattheinjuryorconditionwasworkrelated. Revises 85.34(5)tomakecreditsforexcesstemporarytotal,healingperiod,ortemporary partialpaymentsapplicabletonotonlysubsequentinjuries,butalsofutureweeklybenefitsof anycurrentinjury. Revises 85.39tolimittheemployer spaymentforexaminationsinitiatedbytheemployeeto injuriesthataredeterminedtobecompensable,definethereasonablenessofthefeeforsuch anexamination,andimplementforfeiture,notjustsuspension,ofbenefitspayableduringthe periodofrefusaltosubmittoanexaminationrequestedbytheemployer. Amends 85.45(1)byaddingtherequirementthattheCommissionmayorderthepaymentof futurebenefitsintheformofalumpsumpayment onlyuponapplicationofapartytothe commissioneranduponwrittenconsentofallpartiestotheproposedcommutation DisallowsfilingforIowabenefitsiftheemployeeisinjuredoutsidethestateevenifthe employerhasaplaceofbusinessinthestateandtheemployeeisdomiciledinthestate,but theemployeedoesnotregularlyworkatorfromtheiowalocation. Mandatesthatthefilingofapetitionforjudicialreviewshalldelaytheexecutionofadecision ofthecommissionbyactingasa stayofexecution ifthepartyrequestingthejudicialreview canpostabondwithin30daysoffilingthepetition. Revises 86.39toclarifythatattorneyfeesareonlyrecoverableontheamountofbenefits securedwheretheattorneycandemonstratethattheinjuredemployeewouldnothavebeen paidbutfortheeffortsoftheattorney. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

17 IOWALAWONLYFILING EXHIBITIBI ImpactonIndemnityPermanentPartialDisability(PPD)BenefitCompensation DuetotheEnactmentofHouseFile(HF)518,EffectiveJuly1,2017 (1) PreHF518MaximumPPDDuration(weeks)forShoulderInjuries 500 (2) PostHF518MaximumPPDDuration(weeks)forShoulderInjuries 400 (3) ImpactofChangeinMaximumPPDDuration=(2)/(1) % (4) (5) ImpactofApplicationofFunctionalImpairmentforBasisofCompensationfor PPDShoulderInjuries 1 CombinedChangeinPPDBenefitCompensationforShoulderInjuries =([1.0+(3)]x[1.0+(4)] % 68.0% (6) IndemnityPPDBenefitCostsforShoulderInjuriesasaPercentageofTotal IndemnityPPDInjuryCosts % (7) ImpactofEnactedHF518onIndemnityPPDInjuryCosts=(5)x(6) 12.2% 1 2 ChangefromLossofEarningsCapacitytosolelyFunctionalImpairment.Theselectionof60%isbasedonactuarialjudgment andimplictlyreflectsotherprovisionsofenactedhf518;mostprominently,thechangeinthedeterminationofppddisabilty forunscheduledinjuries(otherthanshoulders)andthenewvocationaltrainingbenefit. BasedonNCCIWorkersCompensationStatisticalPlan(WCSP)dataforPolicyYears2010through2013andIowatransactional datalicensedtoncci. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

18 IOWA LAW-ONLY FILING EXHIBIT I-B-II Impact By Type of Injury Due to House File 518, Effective 07/01/2017 Percentage Type of Injury of Losses (a) Effect (%) Fatal 2.8% 0.0 Permanent Total 1.5% 0.0 Permanent Partial 31.7% Temporary Total 7.8% 0.0 Indemnity 43.8% -8.8 (b) Medical 56.2% 0.0 Total Losses 100.0% -3.9 (b) (a) (b) Proportions within indemnity based on losses for policies becoming effective during the 24-month period period ending 02/28/2014 on the 07/01/2016 law level and developed to an ultimate basis by type of injury. Indemnity/medical split based on Policy Years 2013 and 2014 financial data trended to 07/01/2017. Weighted average. Copyright 201 National Council on Compensation Insurance, Inc. All Rights Reserved.

19 WORKERS COMPENSATION AND EMPLOYERS LIABILITY Exhibit II Effective July 1, 2017 IOWA Page S1 CLASS MIN D CLASS MIN D CLASS MIN D CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO D D D D A N P P X D D D D D D D D D D * Refer to the Footnotes Page for additional information on this class code. Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

20 WORKERS COMPENSATION AND EMPLOYERS LIABILITY Exhibit II Effective July 1, 2017 IOWA Page S2 CLASS MIN D CLASS MIN D CLASS MIN D CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO D N * Refer to the Footnotes Page for additional information on this class code. Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

21 WORKERS COMPENSATION AND EMPLOYERS LIABILITY Exhibit II Effective July 1, 2017 IOWA Page S3 CLASS MIN D CLASS MIN D CLASS MIN D CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO M M M D M M M M M M M M M F F F F M M M F D D M M M N M* M* M* F N N F N F F F F F * Refer to the Footnotes Page for additional information on this class code. Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

22 WORKERS COMPENSATION AND EMPLOYERS LIABILITY Exhibit II Effective July 1, 2017 IOWA Page S4 CLASS MIN D CLASS MIN D CLASS MIN D CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO CODE RATE PREM ELR RATIO F F a a a a a F M M M M M M * Refer to the Footnotes Page for additional information on this class code. Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

23 WORKERS COMPENSATION AND EMPLOYERS LIABILITY Effective July 1, 2017 IOWA Exhibit II Page S5 FOOTNOTES a A D Rate for each individual risk must be obtained from NCCI Customer Service or the Rating Organization having jurisdiction. Minimum Premium $100 per ginning location for policy minimum premium computation. Rate for classification already includes the specific disease loading shown in the table below. See Basic Manual Rule 3-A-7. Code No. Disease Loading Symbol Code No. Disease Loading Symbol Code No. Disease Loading Symbol 0059D 0.56 S 1624D 0.06 S 3085D 0.13 S 0065D 0.13 S 1710D 0.07 S 3175D 0.07 S 0066D 0.13 S 1741D 1.10 S 4024D 0.05 S 0067D 0.13 S 1803D 0.51 S 5508D 0.11 S 1164D 0.10 S 3081D 0.18 S 6251D 0.07 S 1165D 0.06 S 3082D 0.07 S 6252D 0.04 S S=Silica F M N Rate provides for coverage under the United States Longshore and Harbor Workers Compensation Act and its extensions. Rate includes a provision for USL&HW Assessment. Risks are subject to Admiralty Law or Federal Employers Liability Act (FELA). However, the published rate is for risks that voluntarily purchase standard workers compensation and employers liability coverage. A provision for the USL&HW Assessment is included for those classifications under Program II USL Act. This code is part of a ratable / non-ratable group shown below. The statistical non-ratable code and corresponding rate are applied in addition to the basic classification when determining premium. Class Code Non-Ratable Element Code P X Classification is computed on a per capita basis. Refer to special classification phraseology in these pages which is applicable in this state. * Class Codes with Specific Footnotes 6702 Rate and rating values only appropriate for laying or relaying of tracks or maintenance of way - no work on elevated railroads. Otherwise, assign appropriate construction or erection code rate and elr each x Rate and rating values only appropriate for laying or relaying of tracks or maintenance of way - no work on elevated railroads. Otherwise, assign appropriate construction or erection class rate x and elr x Rate and rating values only appropriate for laying or relaying of tracks or maintenance of way - no work on elevated railroads. Otherwise, assign appropriate construction or erection class rate and elr each x Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

24 WORKERS COMPENSATION AND EMPLOYERS LIABILITY Effective July 1, 2017 IOWA Exhibit II Page S6 MISCELLANEOUS VALUES Basis of premium applicable in accordance with Basic Manual footnote instructions for Code "Taxicab Co.": Employee operated vehicle $65,800 Leased or rented vehicle $43,900 Catastrophe (other than Certified Acts of Terrorism) - (Voluntary) Expense Constant applicable in accordance with Basic Manual Rule 3-A-11 $160 Maximum Weekly Payroll applicable in accordance with Basic Manual Rule 2-E -- "Executive Officers" including members of limited liability companies, Rule 2-E-3 for Partners and Sole Proprietors, and Basic Manual footnote instructions for Code "Athletic Sports or Park: Non-Contact Sports", and Code "Athletic Sports or Park: Contact Sports".... $3,400 Minimum Weekly Payroll applicable in accordance with Basic Manual Rule 2-E -- "Executive Officers" and members of limited liability companies and Rule 2-E-3 for Partners and Sole Proprietors $400 Premium Discount Percentages - (See Basic Manual Rule 3-A-19-a.) The following premium discounts are applicable to Standard Premiums: Type A Type B First $10, Next 190, % 5.1% Next 1,550, % 6.5% Over 1,750, % 7.5% Terrorism (Voluntary) United States Longshore and Harbor Workers' Compensation Coverage Percentage applicable only in connection with Basic Manual Rule 3-A % (Multiply a Non-F classification rate by a factor of 2.08 to adjust for differences in benefits and loss-based expenses. This factor is the product of the adjustment for differences in benefits (1.97) and the adjustment for differences in loss-based expenses (1.054).) Experience Rating Eligibility A risk qualifies for experience rating on an intrastate basis when it meets the premium eligibility requirements for the state in which it operates. The eligibility amount varies by rating effective date. The Experience Rating Plan Manual should be referenced for the latest approved eligibility amounts by state and by effective date. Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

25 RETROSPECTIVE RATING PLAN MANUAL IOWA STATE SPECIAL RATING VALUES RR 1 Effective July 1, 2017 Exhibit II 1. Hazard Group Differentials 2. Tax Multipliers A B C D E F G a. State (non-f Classes) b. Federal Classes, or non-f classes where rate is increased by the USL&HW Act Percentage Expected Loss and 3. Expected Loss Ratio Allocated Expense Ratio 4. Table of Expense Ratios Type A: Type B: Table of Expected Loss Ranges Effective January 1, Excess Loss Factors (Applicable to New and Renewal Policies) Per Accident Hazard Groups Limitation A B C D E F G $10, $15, $20, $25, $30, $35, $40, $50, $75, $100, $125, $150, $175, $200, $225, $250, $275, $300, $325, $350, $375, $400, $425, $450, $475, $500, $600, $700, $800, $900, $1,000, $2,000, $3,000, $4,000, $5,000, $6,000, $7,000, $8,000, $9,000, $10,000, Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.