Classification & Rating Committee Meeting May 31, Tony Milano Vice President, Actuary

Size: px

Start display at page:

Download "Classification & Rating Committee Meeting May 31, Tony Milano Vice President, Actuary"

Job Baker
6 years ago
Views:

1 Classification & Rating Committee Meeting May 31, 2018 Tony Milano Vice President, Actuary

2 NOTICE & COPYRIGHT This presentation was developed by the Workers' Compensation Insurance Rating Bureau of California (WCIRB) for informational purposes only. The WCIRB shall not be liable for any damages of any kind, whether direct, indirect, incidental, punitive or consequential, arising from the use, inability to use, or reliance upon information provided in this presentation Workers Compensation Insurance Rating Bureau of California. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, without limitation, photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Workers Compensation Insurance Rating Bureau of California (WCIRB), unless such copying is expressly permitted by federal copyright law. No copyright is claimed in the test of statutes and regulations quoted within this work. Each WCIRB member company (Company) is authorized to reproduce any part of this work solely for the purpose of transacting workers compensation insurance. This reproduction right does not include the right to make any part of this work available on any website or on any form of social media. Workers Compensation Insurance Rating Bureau of California, WCIRB, WCIRB California, WCIRB Connect, WCIRB CompEssentials, X-Mod Direct, escad and the WCIRB California logo (WCIRB Marks) are registered trademarks or service marks of the WCIRB. WCIRB Marks may not be displayed or used in any manner without the WCIRB s prior written permission. Any permitted copying of this work must maintain any and all trademarks and/or service marks on all copies. To seek permission to use any of the WCIRB Marks or any copyrighted material, please contact the Workers Compensation Insurance Rating Bureau of California at customerservice@wcirb.com.

3 2019 Classification Relativities Preliminary Draft Summary Relativities will underlie proposed January 1, 2019 advisory pure premium rates Almost 100% of policy year experience included - Data from one insolvent insurer excluded Methodologies consistent with 1/1/18 Filing Reflects class definition changes adopted by Committee for 2019 Filing Preliminary draft does not include (will be reflected for filing): - Adjustment for approved July 1, 2018 pure premium rates - Loss limit factors at a 2019 level - Some data corrections in response to queries received after draft date 3

4 Summary of Process Reflects changes in classification s pure premium rate relative to statewide average (relativity changes balance to 0%) Based on unit statistical data on losses and payroll by classification - Through policy year Data subject to series of data quality controls - Excludes data of insolvent insurers Principal components of computation - Expected loss to payroll ratios - Adjusted (actual) loss to payroll ratios - Selected loss to payroll ratios - 25% change limitation 4

5 Expected Loss to Payroll Ratios Reflects loss component of approved January 1, 2018 pure premium rate change Adjustments - Large loss limitation ($500,000 per claim) - Change in industrial sector average relativity 5

6 Adjusted Actual Loss to Payroll Ratios Based on 2, 3, 4 or 5 years of experience Adjusted payroll computation - Includes projected wage inflation and minimum wage changes - Wage level changes through PY 2019 adjusted on a relative basis Adjusted losses computation - Development to ultimate - Current benefit level - All years adjusted to current years average losses - Large loss limitation ($500,000 per claim) - Overall expected level of experience 6

7 Selected Loss to Payroll Ratios Combination of Adjusted Actual and Expected loss to payroll ratios Credibility - Full credibility standards based on claim counts and average claim size - Classification s credibility based on total expected losses for years used in computation of classification relativities - Full credibility Expected loss to payroll ratio not used in computation 7

8 25% Change Limitation Relativity changes limited to 25% Net impact of limitation spread across all classifications Some special restrictions applied to classes with definitional changes 8

9 Classifications with Recommended Definitional Changes for 2019 Salvage Material Dealers Study 8032, Stores clothing, shoes, linens or fabric products wholesale - Data transferred from 8264(4) (eliminated) - Includes proportionate data not specifically assignable to 8032, 9403 or Little change to 8032 relativity, which was significantly lower than , Metal Scrap Dealers - Data transferred from 8265(1) (eliminated) - Includes proportionate data not specifically assignable to 8500 or Modest increase from prior 8500 expected relativity 9403, Garbage or Refuse Collecting; Street Sweeping Service Companies; Document Destruction - Data transferred from 8264 (eliminated) - Includes proportionate data not specifically assignable to 8032, 9403 or Relativity 15% above expected relativity 9424, Garbage/Transfer Station/Material Recovery; Recycled Material Dealers - Data transferred from 8264(1), 8264(2), 8264(3) and 8265(2) (all eliminated) - Includes proportionate data not specifically assignable to 8032, 8500, 9403 or Relativity 14% below expected relativity 9

10 Classifications with Recommended Definitional Changes for 2019 Schools Study 8868, Colleges or Schools private professionals - Data transferred to 8869, 8871, 8872, 8873, 8874 and 8876 (NEW) - Data transferred from 8810 and 8742 related to BNs remaining in Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity restricted to 25% decrease from prior 8868 expected relativity (-41% unrestricted) 8869, Vocational Schools private professors, teachers or academic professionals (NEW) - Data transferred from Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity restricted to 25% increase from prior 8868 expected relativity (+46% unrestricted) 8871, Supplemental Educational Services private (NEW) - Data transferred from 8868 and Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity for new classification 19% below prior 8868 expected relativity 8872, Social Service, Charitable/Welfare Organizations (NEW) - Data transferred from 8868, 9101, 8742 and Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity for new classification 8% above combined expected relativity for 8868, 8810 and 8742 (20% below 8868 expected relativity) 10

11 Classifications with Recommended Definitional Changes for 2019 Schools Study ( Continued) 8873, Training/Day Programs for Adults with Developmental Disabilities (NEW) - Data transferred from 8868 and Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity restricted to 25% increase from prior 8868 expected relativity (+207% unrestricted) 8874, Special Educational Services for Children or Youth (NEW) - Data transferred from 8868 and Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity restricted to 25% increase from prior 8868 expected relativity (+109% unrestricted) 8876, Adult Day Health Care/Community-Based Adult Services; Senior Day Programs/Activity Centers (NEW) - Data transferred from 8868 and Includes proportionate data not specifically assignable to 8868, 8869, 8871, 8872, 8873, 8874 or Relativity restricted to 25% increase from prior 8868 expected relativity (+143% unrestricted) 11

12 Classification 8868 Private Schools Study Selected and Indicated Loss to Payroll Ratios 3.00 Selected Loss to Payroll Ratio Indicated Loss to Payroll Ratio Prior to 25% Change Restriction (2015) 8868 (2018) 8868 (2019) 8869 (2019) 8871 (2019) 8872 (2019) 8873 (2019) 8874 (2019) 8876 (2019) Classification (Effective Year) Note: 2019 is preliminary. 12

13 Classifications with Recommended Definitional Changes for 2019 Schools Study ( Continued) 9101, Colleges or Schools private all others - Data transferred to 8871, 8872, 8873, 8874, 8876 and 9102 (NEW) - Relativity 14% above prior 9101 expected relativity 9102, Vocational Schools private all others (NEW) - Data transferred from Relativity 16% above prior 9101 expected relativity 13

14 Classifications with Recommended Definitional Changes for 2019 Other Studies 7600, Communication Service Providers - Data transferred from 7606 (eliminated) - Relativity restricted to 25% increase from prior 7600 expected relativity (+27% unrestricted) 5029, Concrete or Asphalt Sawing or Drilling - Established in Combined with 3724(1), Millwright Work for ratemaking prior to Relativity 20% above 5029/3724 expected relativity relativity slightly below 5029/3724 expected relativity 14

15 Other Classifications with Limited Relativity Changes 2081, Butchering; Stockyards (+61%) 3179, Electrical Apparatus Mfg. (+39%) 3574, Machine Mfg.; Golf Club or Fishing Rod Mfg., Repair, or Assembly (+28%) 3683, Speaker Mfg. (-36%) 3808, Automobile or Motorcycle Mfg. or Assembling (+44%) 3831, Machine Shops aircraft components (+29%) 7421, Aircraft Operation personnel transport flying crew (+36%) 8278, Racing Stables jockeys/harness drivers (+62%) 9054, Spas or Baths (+59%) 9549, Advertising Companies (+43%) 15

16 Other Classifications with Limited Relativity Changes Low Credibility Manufacturing Classes 2402, Carpet or Rug Mfg. (+27%) 2660, Boot or Shoe Mfg. or Repairing (+32%) 4240, Box Mfg. paper or cardboard rigid (+27%) 4283, Building or Roofing Paper or Felt Asphalt Saturation (+26%) 4297, Electronic Pre-Press; Graphic Design (+29%) 4351, Photo Engraving (+26%) 4354, Printed Circuit Board Mfg. (+27%) 4362, Motion Pictures negative and print processors (+39%) 8846, Printing Operation screen printing editing and designing; Screen Printed Merchandise Dealers (+25.1%) 16

17 % of Classifications Distribution of Preliminary Indicated Classification Relativity Changes 50% 40% % 20% 10% 0% Less than -25% -25% to -15% -15% to -10% -10% to -5% to -5% +5% Indicated Relativity Change +5% to +10% +10% to +15% +15% to +25% Greater than +25% 17

wcirb.com 1221 Broadway, Suite 900 Oakland, CA 94612 888.CA.WCIRB (888.229.

Classification Relativities Preliminary Draft

W o r k e r s C o m p e n s a t i o n I n s u r a n c e R a t i n g B u r e a u o f C a l i f o r n i a Classification Relativities Preliminary Draft WCIRB Classification & Rating Committee Meeting June