Iowa Residual Market State Activity Report

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1 Iowa Residual Market State Activity Report

2 Executive Summary NCCI, as Pool and Plan Administrator of the Iowa Workers Compensation Insurance Plan, is pleased to provide the Iowa Residual Market State Activity Report. Readers will notice that the order of our charts and tables has been reorganized, based on customer feedback. This will provide a more streamlined picture of the key measurement factors and issues relating to the operation of the Iowa Plan. Residual Market demographics contained in this report include: Table of Contents Residual Market Total Policies and Premium in Force... 1 Iowa Residual Market Reinsurance Pool Booked Loss Ratio... 2 Iowa Residual Market Reinsurance Pool Ultimate Net Written Premium... 2 Iowa Residual Market Reinsurance Pool Net Operating Results... 3 Collections/Indemnification... 4 Total Applications Bound... 5 Total Application Premium Bound... 6 Residual Market Total Policy Counts... 7 Residual Market Total Premium Volume... 7 Total Premium Distribution by Size of Risk... 8 Residual Market Top 10 Classification Codes by Policy Count... 9 Residual Market Top 10 Classification Codes by Premium Volume... 9 Glossary of Terms If you have any questions or comments about this report, please feel free to contact the individual listed below. Heidi Mangum, Plan Administration Copyright 2018 National Council on Compensation Insurance, Inc. This material is owned by NCCI and is protected by copyright law. NCCI will seek all appropriate legal remedies for the unauthorized use, sale, reproduction, distribution, preparation of derivative works, transfer or assignment of this material, or any part thereof. NCCI makes no representation or warranty, express or implied, as to any matter whatsoever, including but not limited to the accuracy of any information, product, or service furnished hereunder. The recipient of this material is subject to any license agreement that governs the use of this information and subscribes to and utilizes the information as is.

3 Residual Market Total Policies and Premium in Force As of December 31, 2017 compared to prior year Total number of Assigned Risk Plan policies and estimated premium volume in force reported as of the date listed above. The other exhibits in this report describe quarterly and year-to-date data vs # 2017 vs % Policy Count 4,352 4, % Premium Volume $29,568,644 $33,663,152 -$4,094, % Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 1

4 Ultimate Premium Percentage Iowa Residual Market State Activity Report Iowa Residual Market Reinsurance Pool Booked Loss Ratio Policy Year Financial Results through 3rd Quarter 2017 for 2016 and prior years* The ratio of total incurred losses to total earned premiums in a given period, in this state, expressed as a percentage. 150% Booked Loss Ratio 100% 50% 52.9% 53.2% 60.6% 55.0% 0% Iowa Residual Market Reinsurance Pool Ultimate Net Written Premium (Projected to Ultimate) (000 s) Policy Year Financial Results through 3rd Quarter 2017 for 2016 and prior years* The premium charged by an insurance company for the period of time and coverage provided by an insurance contract in this state. $50,000 $40,000 $30,000 $20,000 $10,000 $46,537 $40,309 $37,525 $31,450 $ Policy Year * Fourth Quarter 2017 data will be available the end of April 2018 due to the timing of data reporting Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 2

Policy Year Incurred Losses Including IBNR (000)'s Iowa Residual Market State Activity Report Iowa Residual Market Reinsurance Pool Net Operating Results (Projected to Ultimate) Incurred Losses

5 Policy Year Incurred Losses Including IBNR (000)'s Iowa Residual Market State Activity Report Iowa Residual Market Reinsurance Pool Net Operating Results (Projected to Ultimate) Incurred Losses Policy Year Financial Results through 3rd Quarter 2017 for 2016 and prior years* Policy year incurred losses reflect paid losses, case reserves and IBNR reserves for policies written in a particular policy year in that state. $40,000 $30,000 $20,000 $24,618 $21,444 $22,740 $17,298 $10,000 $ Policy Year Iowa Residual Market Reinsurance Pool Net Operating Results (Projected to Ultimate) Estimated Net Operating Gain/(Loss) (000 s) Policy Year Financial Results through 3rd Quarter 2017 for 2016 and prior years* The financial statement presentation that reflects the excess of earned premium over incurred losses, less all operating expenses, plus all investment income in that state $5, $4,694 $7, $7,446 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Operating Gain/(Loss) (000's) * Fourth Quarter 2017 data will be available the end of April 2018 due to the timing of data reporting Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 3

6 Collections/Indemnification The following shows a comparison of gross written premium and uncollectible premium reported in Iowa for Policy Years , obtained through NP-4 and NP-5 reports including traumatic and black lung claims, evaluated through Third Quarter Policy Year Gross Written Premium Uncollectible Premium Percentage 2013 $47,337,425 $800, % 2014 $40,997,770 $689, % 2015 $38,266,851 $891, % 2016 $31,597,499 * N/A 2017 $16,939,926 * N/A * The uncollectible premiums provided are reported by the servicing carriers on a quarterly basis. Uncollectible premium is generally reported up to 24 months after the policy expiration date due to audit, billing, and collection requirements. Therefore, the uncollectible premium data has not yet developed for the more recent policy years. Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 4

7 Total Applications Bound 2014 vs vs vs The number of applications both new and churn that are assigned to a Servicing Carrier or a Direct Assignment Carrier (if applicable) Applications Bound st Qtr 2nd Qtr 3rd Qtr 4th Qtr Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 5

$2,103,073 Iowa Residual Market State Activity Report Total Application Premium Bound 2014 vs. 2015 vs. 2016 vs.

8 $2,103,073 Iowa Residual Market State Activity Report Total Application Premium Bound 2014 vs vs vs The total estimated premium on bound applications both new and churn that are assigned to a Servicing Carrier or a Direct Assignment Carrier (if applicable). $6,000,000 Premium Bound $4,000,000 $2,000,000 $0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 6

Residual Market Total Policy Counts Annual Data for Policies Reported through December 31, 2017 Total number of all Assigned

5,000 4,000 4,795 4,665 4,571 4,393 Number of Policies 3,000 2,000 1,000 0 2014 2015 2016 2017 Policy Year Residual Market

effective dates during the calendar period listed above.

9 Residual Market Total Policy Counts Annual Data for Policies Reported through December 31, 2017 Total number of all Assigned Risk Plan policies with effective dates during the calendar period listed above. 5,000 4,000 4,795 4,665 4,571 4,393 Number of Policies 3,000 2,000 1, Policy Year Residual Market Total Premium Volume Annual Data Reported through December 31, 2017 Total amount of all Assigned Risk Plan premium with effective dates during the calendar period listed above. $50,000,000 $40,000,000 $45,458,957 $42,135,106 $33,604,524 $29,965,495 Premium Volume $30,000,000 $20,000,000 $10,000,000 $ Policy Year Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 7

10 Total Premium Distribution by Size of Risk Annual Data Reported through December 31, 2017 The total number of Assigned Risk Plan policies reported to NCCI by Direct Assignment and Servicing Carriers in a premium range as of the date listed above. Premium Interval Policy Count % of Total Total State % of Total Average Policies Premium Premium Premium $ , % $2,314, % $953 $ % $2,876, % $3,640 $ % $3,709, % $7,025 $ % $5,178, % $13,882 $ % $5,839, % $31,907 $ % $3,656, % $64,141 $ % $3,498, % $129,592 $ % $2,893, % $361,664 Total 4, % $29,965, % $6,821 Annual 2016 Data for Comparison % of Total Total State % of Total Average Premium Interval Policy Count Policies Premium Premium Premium $ , % $2,349, % $938 $ % $2,789, % $3,595 $ % $4,143, % $7,132 $ % $5,266, % $13,787 $ % $7,129, % $31,134 $ % $3,720, % $67,648 $ % $4,491, % $136,092 $ % $3,712, % $309,404 Total 4, % $33,604, % $7,352 Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 8

11 Residual Market Top 10 Classification Codes by Policy Count Annual Data Reported through December 31, 2017 The top 10 governing class codes by total policy count policies issued by Servicing Carriers and Direct Assignment Carriers in this state as of the date listed above. Rank Code Description Policy Count % of Policies Farm: Field Crops & Drivers % Carpentry Construction of Residential Dwellings Not Exceeding Three Stories in Height % Trucking-Long Distance Hauling-& Drivers % Firefighters & Drivers - Volunteer % Tree Pruning Spraying Repairing Trimming or Fumigating & Drivers % Farm: Cattle or Livestock Raising NOC & Drivers % Roofing-All Kinds & Drivers % Trucking-Local Hauling Only-& Drivers % Clerical Office Employees NOC % Nursing-Home Health Public and Traveling-All Employees % Residual Market Top 10 Classification Codes by Premium Volume Annual Data Reported through December 31, 2017 The top 10 governing class codes by premium volume written on total policies issued by Servicing Carriers and Direct Assignment Carriers in this state as of the date listed above. % of Rank Code Description Premium Premium Trucking-Long Distance Hauling-& Drivers $1,812, % Farm: Field Crops & Drivers $1,453, % Trucking-Local Hauling Only-& Drivers $1,188, % Store: Wholesale NOC $1,077, % Carpentry Construction of Residential Dwellings Not Exceeding Three Stories in Height $1,010, % Roofing-All Kinds & Drivers $1,010, % Tree Pruning Spraying Repairing Trimming or Fumigating & Drivers $946, % Farm: Cattle or Livestock Raising NOC & Drivers $857, % Firefighters & Drivers - Volunteer $804, % Carpentry NOC $734, % Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 9

12 Glossary of Terms Applications Bound The applications that are actually assigned to a Servicing Carrier or Direct Assignment Carrier (if applicable). Earned Premium or Premiums Earned That portion of written premiums applicable to the expired portion of the time for which the insurance was in effect. When used as an accounting term, premiums earned describes the premiums written during a period, plus the unearned premiums at the beginning of the period, less the unearned premiums at the end of the period. Premium Bound The total estimated annual premium on bound applications. Underwriting Gain/ (Loss) The financial statement presentation that reflects the excess of earned premium over incurred losses. In Force (Policies/Premium) All policies and associated estimated premium that are current as of a given date. Incurred But Not Reported (IBNR) Pertaining to losses where the events that will result in a loss, and eventually a claim, have occurred, but have not yet been reported to the insurance company. The term may also include bulk reserves for estimated future development of case reserves. Loss Ratio The ratio of total incurred losses to total earned premiums in a given period, expressed as a percentage. The formula for loss ratio is (loss + loss adjustment expense)/earned premium. Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 10

Iowa Residual Market State Activity Report

Iowa Residual Market State Activity Report Executive Summary NCCI, as Pool and Plan Administrator of the Iowa Workers Compensation Insurance Plan, is pleased to provide the Iowa Residual Market State Activity