Additional Unit Data Reporting Topics. Objective

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1 Additional Unit Data Reporting Topics Presented by: Richard Saltzman and Lynette Williams 1 Objective Become familiar with advanced unit statistical exposure and loss topics. 2 1

2 Questions What is the Oldest NCCI Data Type? Original Home of NCCI Newest Data Type Statistical Plan s Start Year NCCI s Home Office Florida Capital Length of Florida Data Type Using Sampling Trivia Possible Answers 852 Miles Medical Data Call Miami Unit Statistical Data Orlando New York 1950 Detailed Claim Information Boca Raton Paris Tallahassee ,197 Miles Ft. Lauderdale 3 Agenda Exposure Reporting Loss Reporting Multiple Record Reporting 4 2

3 Exposure Reporting 5 Exposure Topics Per Capita Ratable/Nonratable Companion Codes No Exposure Developed Split Periods Individual Risk Rating Plans Additional Exposure Topics 6 3

4 Exposure Basis Payroll Non- Payroll Salaries, Wages, Bonuses Round to the Nearest Dollar Per Capita Round to the Nearest Tenth (Implied Decimal) 7 Per Capita Domestic Workers Domestic Workers Residences Full-Time Domestic Workers Residences Part-Time Class Code 0913 Class Code 0908 Workers more than 20 hours per week Number of workers Workers 20 hours or less per week Aggregate hours of all workers 8 4

5 Reporting Per Capita Codes Charged Exposure Duration of Coverage Amount 1 day to 1 month and 23 days 1 1 month and 24 days to less than 3 months 2 3 months to 4 months and 5 days 3 4 months and 6 days to 5 months and 11 days 4 5 months and 12 days to 6 months and 17 days 5 6 months and 18 days to 7 months and 23 days 6 7 months and 24 days to less than 9 months 7 9 months to 10 months and 5 days 8 10 months and 6 days to 11 months and 11 days 9 11 months and 12 days to 1 year and 17 days 10 1 year and 18 days to 1 year, 1 month, and 23 days 11 Unit Statistical Reporting Guidebook: Part 4-H-3 9 Per Capita Codes Example What is the correct reported exposure for Molly if reporting electronically? A. 1 B. 15 C. 10 Molly 40 hours per week and works all year 10 5

6 Per Capita Codes Example What is the correct reported exposure for both workers? A. 1.2 B. 20 C. 8 Theresa works 10 hours per week for 4 months Martha works 3 hours per week for 6 months 11 CT Volunteer Ambulance Service Report exposure as number of service responses Example: If a driver responds to 200 calls, the exposure would be reported as

7 Exposure Topics Per Capita Ratable/Nonratable Companion Codes No Exposure Developed Split Periods Individual Risk Rating Plans Additional Exposure Topics 13 Ratable/Nonratable Companion Codes Certain class codes have companion statistical codes Nonratable statistical code and rate must be applied in addition to the ratable classification code Report both the ratable classification code and the nonratable statistical code with their corresponding rates Exposure Nonratable exposure amount = ratable exposure amount Premium Ratable Subject to experience rating Nonratable Not subject to experience rating 14 7

8 Ratable and Nonratable Example A commercial airline pilot is classified to Class Code 7405, the corresponding nonratable Statistical Code is Exposure Act Class Exposure Manual Rate Premium Mod Mod Effective Date Rate Effective Date $50, $ /1/14 1/1/14 What would the exposure be for the nonratable statistical code 7445? a. 50,000 b. 0 c. 40, Exposure Topics Per Capita Ratable/Nonratable Companion Codes No Exposure Developed Split Periods Individual Risk Rating Plans Additional Exposure Topics 16 8

9 Single-State Reporting Policy Issuance: - State Issued With Estimated Exposure -State on If Any Basis Audit Results: State Developed Exposure at Audit Unit Reporting: Report Applicable Data State Issued With Estimated Exposure State Did Not Develop Exposure at Audit Report Stat Code 1111 and any other applicable statistical codes separately State Issued With Estimated Exposure State Has Not Yet Been Audited Report Applicable Data with Estimated Exposure 17 Multistate Reporting Policy Issuance: - State Issued With Estimated Exposure -State on If Any Basis - State Not Originally on Policy State Issued With Estimated Exposure Audit Results: State Developed Exposure at Audit State Did Not Develop Exposure at Audit Unit Reporting: Report Applicable Data Report Statistical Code 1111 State Issued With Estimated Exposure State Has Not Yet Been Audited Report Applicable Data with Estimated Exposure Report the highest expense constant of all states covered on the policy 18 9

10 Multistate Reporting Policy Issuance: - State Issued With Estimated Exposure -State on If Any Basis - State Not Originally on Policy State Issued With Estimated Exposure Audit Results: State Developed Exposure at Audit State Did Not Develop Exposure at Audit Unit Reporting: Report Applicable Data Report Statistical Code 1111 State Issued With Estimated Exposure State Has Not Yet Been Audited Report Applicable Data with Estimated Exposure Report the highest minimum premium of all states covered on the policy 19 Multistate Reporting Policy Issuance State on If Any Basis and Does not have the highest expense constant and Does not have the highest minimum premium Audit Results State Did Not Develop Exposure at Audit Unit Reporting Do Not Report 20 10

11 Case Study 21 DemoNators Demo and Salvage Specialists 22 11

12 Case Study DemoNators I d like to renew my WC policy for DemoNators. Could we add Georgia on an if any basis? Sure, I ll contact the insurance carrier and get it taken care of. The DemoNators would like to renew its WC policy with one change adding the state of Georgia on an if any basis. The policy is now renewed. I will send you a packet with the details soon. 23 Insured Name Policy Number Case Study Policy Information DemoNators DEP12345 Policy Term January 01, 2014 January 01, 2015 States Experience Rating Modification 0.95 Florida, Georgia (if any) Business Operations Demolition/Wrecking Buildings (Class 5213) Deductible Program Workplace Safety Program Increased Limits of Liability Yes, $5,000 per claim (Gross Program) Qualified for program in Florida $600,000 per claim, $600,000 per policy, $1,000,000 per policy 24 12

13 Case Study DemoNators Demolition/Wrecking Buildings Exposure in Florida and No Exposure in Georgia States Meet Minimum Premium Requirements Class/Stat Codes Descriptions Exposure Premium Florida 5213 Wrecking Buildings or Structures Not Marine All Operations $ 30,000 $ 3, Expense Constant $ 0 $ 886 Georgia 1111 No Exposure Developed $ 0 $ Expense Constant $ 0 $ 1, Case Study DemoNators Demolition/Wrecking Buildings Exposure in Florida and No Exposure in Georgia States Meet Minimum Premium Requirements Class/Stat Codes Descriptions Exposure Premium Florida 5213 Wrecking Buildings or Structures Not Marine All Operations $ 30,000 $ 3, Expense Constant $ 0 $ 886 Georgia 1111 No Exposure Developed $ 0 $ Expense Constant $ 0 $ 1,

14 Exposure Topics Per Capita Ratable/Nonratable Companion Codes No Exposure Developed Split Periods Individual Risk Rating Plans Additional Exposure Topics 27 What Is a Split Period? A split period occurs when multiple rates or experience modification factors are applicable to a policy period

15 Reasons for Reporting Split Periods Anniversary Rating Effective Date changes Application of late experience modification factor Carrier adoption of class codes and rates are different from NCCI s rate filing effective dates 29 Reporting Split Periods Split Period Indicators (0 9) Class codes prorated exposure and premium Statistical codes prorated premium 30 15

16 Rate Effective Date Effective date of the manual/charged rate corresponding to class code, exposure, and premium Normally equals the Policy Effective Date or Anniversary Rating Date Corresponds to the effective date of the class code valid per state 31 Experience Modification Effective Date The date the experience modification factor became effective Equals the Rating Effective Date on the Mod Worksheet May or may not equal Anniversary Rating Date Corresponds to the experience modification factor and its associated class code, exposure, and premium 32 16

17 Split Periods Example 1 Anniversary Rating Date (ARD) is different from Mod Effective Date Policy cancelled and rewritten 01/01/11 01/01/12 PED Split Period 1: Mod Effective Date 10/15/10 Mod 1.00 Split Period 2: Mod Effective Date 10/15/11 Mod 0.95 Mod Effective Date 01/01/12 Mod /15/10 01/01/11 10/15/11 01/01/12 01/01/13 Original policy written ARD is 10/15/10 Policy renewed ARD is 01/01/12 33 Example 1 (cont d) Pol Nbr: DifferentARD Report Nbr: 1 Cov Provider ID: Corr Seq Nbr: 0 Pol Eff Dt: 1/1/2011 State: 01-AL Class Code Exposure Rate Premium Exp Mod Mod Eff. Date Rate Eff. Date , /15/10 10/15/ , /15/11 10/15/11 1 Split Ind

18 Split Periods Example 2 Carrier adopted rate filing after NCCI s Effective Date. NCCI s Rate Filing NCCI s Rate Filing Carrier Adoption of Effective Date Effective Date NCCI s Rate Filing Class 1234 Discontinued Class 1234 Class 1234 Class 2345 Split Period 1: Rate Effective Date 01/01/10 Split Period 2: Rate Effective Date 03/01/11 01/01/10 01/01/11 03/01/11 01/01/12 Carrier Adoption of NCCI s Rate Filing One-Year Policy Effective 01/01/11 01/01/12 35 Example 2 (cont d) Pol Nbr: CarrAdoptsrates Report Nbr: 1 Class Code Exposure Rate Premium Cov Provider ID: Corr Seq Nbr: 0 Exp Mod Mod Eff. Date Pol Eff Dt: 1/1/2011 State: 54-AK Rate Eff. Date , /01/11 01/01/ , /01/11 03/01/11 1 Split Ind

19 Questions Statistical Code for No Exposure Developed What Includes Salary, Wages, and Bonuses? A Reason for Split Periods Per Capita Domestic Worker Exposure Basis DemoNators Specialty Effective Date of Rate Charged for Class Code Exposure Reported when Policy is Not Audited What Identifies Individual Split Periods Review Time Possible Answers TNT Late Adoption of Rate Filing Home Decorating 1111 Single State Policy Payroll Exposure 1112 Split Period Indicators Demo and Salvage Audited Rate Effective Date Duration of Coverage Estimated Exposure Per Capita 37 Exposure Topics Per Capita Ratable/Nonratable Companion Codes No Exposure Developed Split Periods Individual Risk Rating Plans Additional Exposure Topics 38 19

20 Individual Risk Rating Plans Individual risk rating plans allow for adjustments ( and +) to premium Statistical codes are established for reporting on unit statistical 1st reports Premium adjustments may apply: Subject to experience rating Not subject to experience rating Not part of standard premium 39 NCCI-Filed Premium Programs Statistical Code Premium Program Adjustment Placement 9841 Drug-Free Workplace Premium Credit 9843 Managed Care Premium Credit 9880 Workplace Safety Premium Credit 9851 Small New Employer Credit Premium Credit Subject to Experience Rating Subject to Experience Rating Not Subject to Experience Rating Not Subject to Experience Rating 40 20

21 Carrier Independent Programs Other Than Deductible and Schedule Rating Statistical Code Premium Program Adjustment Placement Independent Carrier Filing Independent Carrier Filing Independent Carrier Filing Independent Carrier Filing Independent Carrier Filing Independent Carrier Filing Premium Credit Premium Credit Premium Debit Premium Debit Premium Credit Premium Debit Subject to Experience Rating Not Subject to Experience Rating Subject to Experience Rating Not Subject to Experience Rating Not Part of Standard Premium Not Part of Standard Premium 41 Deductible and Schedule Rating Stat Code Premium Program Premium Adjustment 9663 Deductible Credit 9664 Deductible Credit 9657 Deductible Credit WV Only 9751 WV only Schedule Rating Schedule Rating Schedule Rating Schedule Rating Credit Debit Credit Debit Placement Not Subject to Experience Rating Subject to Experience Rating Not Part of Standard Premium Not Subject to Experience Rating Not Subject to Experience Rating Not Part of Standard Premium Not Part of Standard Premium NCCI Program Yes Yes No Yes Yes No No Carrier Program Yes Yes Yes Yes Yes Yes Yes 42 21

22 Company Use Only Statistical Codes Map to NCCI class/stat code Reserved for internal use Not reported to NCCI Classification Codes and Statistical Codes Manual 43 Subclassification Mapping DemoNators Example Company Use Class Code Subclassification Descriptions 9730 Demolition and Wrecking Building 1 3 Floors Only (Rate $16.00) 9731 Demolition and Wrecking Buildings 4 Floors and Over (Rate $18.00) NCCI Classification NCCI Class Code Description 5213 Demolition and Wrecking 44 22

23 Combining Subclassifications Company Use Class Code Rate Estimated Exposure Audited Exposure Final Premium 9730 $ , ,805 $51, $ ,000,000 1,291,982 $232,557 Weighted Average Calculation [(323,805 X 16.00) + (1,291,982 X 18.00)] 28,436,556 (323, ,291,982) 1,615,787 $ Individual Risk Rating Plans Workplace Safety Program for DemoNators Filed and Approved in Florida Reduces Premium by 3% Not Subject to Experience Rating 46 23

24 DemoNators Case Study Company-Use Class Code Description 0992 FL Workplace Safety Program 3% Credit Statistical Code 9722 Independent Carrier Filing 9880 NCCI Workplace Safety Program Premium Program Adjustment Placement Premium Credit Premium Credit Not Subject to Experience Rating Not Subject to Experience Rating 47 Premium Placement Algorithm Before Subject Premium Deductible 9664 ( ) Independent Carrier Filings 9721 ( ) and 9723 (+) Drug-Free Workplace 9841( ) Increased Limits (100/100/1,000) 9803 (+) Total Subject Premium Experience Modification Factor Total Modified Premium Schedule Rating 9887 ( ) and 9889 (+) Deductible 9663 ( ) Independent Carrier Filings 9722 ( ) and 9724 (+) Total Standard Premium Deductible 9657 ( ) Independent Carrier Filings 9655 ( ) and 9656 (+) Expense Constant 0900 (+) Catastrophic Provisions for Terrorism 9740 (+) 48 24

25 Exposure Topics Per Capita Ratable/Nonratable Companion Codes No Exposure Developed Split Periods Individual Risk Rating Plans Additional Exposure Topics 49 Taxes and Assessments Not Premium Florida Tax and Assessments Premium Tax Workers Compensation Administration Trust Fund Special Disability (Second Injury) Fund Insurance Guarantee Association Act Workers Compensation Account Georgia Tax and Assessments Premium Tax Workers Compensation State Board Tax County and Municipal Premium Tax Insurers Insolvency Pool Workers Compensation Account Special Fraud Fund Assessment Refer to NCCI s Tax and Assessment Directory USRG: Part 1-F 50 25

26 Taxes and Assessments Example Illinois WC Commission Operations Fund Surcharge Purpose Funds the Illinois WC Commission Operations Fund Base Direct Written Premium Previous Calendar Year Rate 1.01% Carrier Payment Annually July 1 Type Premium Surcharge Not Reflected in Loss Costs or Rates 51 Carrier Rate Deviations Carrier filing 10% debit (+) to FL Class Code 5551 rate (20.01) Class/Stat Codes Exposure Rate Premium Method # ,236 Method # , Rate Deviation Premium (+) Subject to Experience Rating 7,

27 Increased Limits Increased Limit Statistical Codes W/C & EL Statistical Codes Increased Limits 9803 $100,000/$100,000/$1,000, $100,000/$100,000/$2,500, $100,000/$100,000/$5,000, $100,000/$100,000/$10,000, $500,000/$500,000/$500, $500,000/$500,000/$1,000, $500,000/$500,000/$2,500, $500,000/$500,000/$5,000, $500,000/$500,000/$10,000, $1,000,000/$1,000,000/$1,000, $1,000,000/$1,000,000/$2,500, $1,000,000/$1,000,000/$5,000, $1,000,000/$1,000,000/$10,000, Over $1,000,000/$1,000,000/$10,000, All Other Limits of Liability Less Greater than than these Limits, these and Limits none greater 53 Increased Limits Increased Limit Statistical Codes W/C & EL Statistical Codes Increased Limits 9803 $100,000/$100,000/$1,000, $100,000/$100,000/$2,500, $100,000/$100,000/$5,000, $100,000/$100,000/$10,000, $500,000/$500,000/$500, $500,000/$500,000/$1,000, $500,000/$500,000/$2,500, $500,000/$500,000/$5,000, $500,000/$500,000/$10,000, $1,000,000/$1,000,000/$1,000, $1,000,000/$1,000,000/$2,500, $1,000,000/$1,000,000/$5,000, $1,000,000/$1,000,000/$10,000, Over $1,000,000/$1,000,000/$10,000, All Other Limits of Liability Greater than these Limits 54 27

28 Increased Limits Premium DemoNators Example Increased Limits Are 600,000/600,000/1,000,000 Report Statistical Code 9837 (All Other Limits of Liability) 55 Exposure Reporting Review Questions Calculation to Combine Subclasses All Other Limits of Liability Stat Code Pass Through Not Reportable Company Use Only Statistical Codes DemoNators Class Code Same Statistical Codes used for NCCI and Carrier Programs DemoNators Premium Adjustment Do You Combine Subclasses? Possible Answers Demolition Taxes and Assessments Reportable Weighted Average Absolutely No FL Workplace Safety Credit 5213 Demo/Wrecking Buildings Audited Deductibles/Schedule Rating Not Reportable to NCCI Of Course, Yes Per Capita 56 28

29 Loss Reporting 57 Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage 58 29

30 Accident Date Required for All Claims Traumatic, Occupational Disease, and Cumulative Injuries Consistent through life of claim Traumatic Injuries Actual Accident Date Within Policy Period Occupational Disease and Cumulative Injuries If known Actual accident date If not known Last date of exposure to conditions causing the injury 59 Unknown Accident Date Example Lynette and Richard work at Asbestos Eradicators Feb Both are diagnosed with Asbestosis 2014 Reporting 2004 Policy 10th Unit Report Valued 07/2014 Jan Last date of exposure 60 30

31 Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage 61 Catastrophe Claims (Nonextraordinary Loss) One employer One accident involving two or more reportable claims, per state, per policy Catastrophe Codes 01 to 10 Assigned by the carrier Subject to loss limitation rules 62 31

32 Catastrophe Claims (Extraordinary Loss Event) Multiple employers A significant loss event that may involve many claims A unique Catastrophe Code (11 to 99) Assigned by the WC bureau for the event Reviewed on a case-by-case basis May be excluded from experience ratings and state loss cost/rates 63 Extraordinary Loss Events ELE Catastrophe Code Description Tornado and storms OK 98 West Fertilizer plant explosion TX Kleen Energy Systems fire and explosion CT ConAgra plant explosion NC Imperial Sugar Company explosion and fire GA Terrorist attacks DC, NY, and PA 87 World Trade Center rescue, recovery, and cleanup NY Refer to the Extraordinary Loss Event (ELE) Codes and Descriptions chart in the Data Quality section on ncci.com

33 Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage 65 What Is a Noncompensable Claim? A claim that meets one or more of the following: Official ruling denying benefits Claimant s failure to file for benefits Claimant s failure to prosecute claim following carrier s denial of claim Unit Statistical Reporting Guidebook: Part 5-L, 5-M 66 33

34 Noncompensable Claim Reporting Determined Noncompensable Prior to 1st Report No claim to report Determined Noncompensable After 1st but Before 6th Report Report corrections to applicable units Do NOT change Loss Values Type of Settlement Code 05 (Noncompensable) Determined Noncompensable as of 6th Report Do not report corrections Type of Settlement Code 05 (Noncompensable) 67 Noncompensable to Compensable Claim Development A previous noncompensable claim can develop to become compensable This is considered loss development Report the change to compensable on a goingforward basis Do not submit correction reports going back Unit Statistical Reporting Guidebook: Part 5-O 68 34

35 Fraudulent Claim A claim that has been ruled or officially declared fraudulent by a court decision. Unit Statistical Reporting Guidebook: Part 5-J-1, 5-J-2, 5-K-1, 5-K-2 69 Fraudulent Claim Reporting Determined Fraudulent Prior to 1st Report No claim to report Determined Fraudulent After 1st but Before 6th Report Report corrections to applicable units Do NOT change Loss Values Fraudulent Claim Code 02 (Fully Fraudulent) Determined Fraudulent as of 6th Report Do not report corrections Fraudulent Claim Code 02 (Fully Fraudulent) 70 35

36 Partially Noncompensable and Fraudulent Applies when only a portion of the claim is determined to be Noncompensable or Fraudulent Reduce claim value to reflect the Compensable portion of the claim, and report appropriate Type of Settlement Code Other than 05 Reduce claim value to reflect the Not Fraudulent portion of the claim, and report Fraudulent Claim Code 00 (Not Fraudulent) Report corrections as needed to reduce loss values and update the Type of Settlement Code and Fraudulent Claim Code Unit Statistical Reporting Guidebook: Part 5-K-2, 5 N 71 Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage 72 36

37 Subrogation The carrier receives a recovery from an third-party entity with a legal liability for the claim. The gross incurred loss must be reduced by the recovery less recovery expenses. Type of Recovery Loss Conditions Code Description 03 Subrogation Only (Third Party) 04 Subrogation and Second Injury Fund Reimbursement 73 Subrogation Determine Total Incurred Loss Total Incurred Loss = Total Incurred Indemnity + Total Incurred Medical Calculate Net Incurred Cost Total Incurred Loss (Subrogation Recovery Subrogation Expenses) = Net Incurred Loss Determine Which Units Require Corrections Compare Net Incurred Loss to Previous When was the Recovery received? Report Levels 74 37

38 Subrogation Allocation Subrogation Allocation Is Known Allocate to Indemnity and/or Medical, based on the allocation Subrogation Allocation Is Not Known Allocate to Indemnity and/or Medical, based on the proportion of original loss amounts 75 Subrogation Reporting Subrogation Recovery Prior to 1st Report Include calculated subrogation recovery in claim value Type of Recovery Code 03 (Subrogation) or 04 (Subrogation and SIF) Subrogation Recovery After 1st but Before 6th Report Calculate the Net Incurred Loss (as of latest report level) Determine if Correction reports are needed Type of Recovery Code 03 (Subrogation) or 04 (Subrogation and SIF) Subrogation Recovery as of 6th Report Include calculated subrogation recovery in claim value Type of Recovery Code 03 (Subrogation) or 04 (Subrogation and SIF) 76 38

39 Special Fund Reimbursements Claims eligible for carrier reimbursement from a special fund (Second Injury Fund, etc.) require anticipated reimbursement The gross incurred loss must be reduced by the anticipated reimbursement Type of Recovery Loss Conditions Code Description 02 Second Injury Fund Only 04 Subrogation and Second Injury Fund Reimbursement 77 Special Fund Reporting Special Fund Anticipated Reimbursement Prior to 1st Report Include anticipated reimbursement in claim value Type of Recovery Code 02 (SIF only) or 04 (Subrogation and SIF) Special Fund Anticipated Reimbursement After 1st but Before 6th Report Calculate the Net Incurred Loss (as of latest report level) Determine if Correction reports are needed Type of Recovery Code 02 (SIF only) or 04 (Subrogation and SIF) Special Fund Anticipated Reimbursement as of 6th Report Include anticipated reimbursement in claim value Type of Recovery Code 02 (SIF only) or 04 (Subrogation and SIF) 78 39

40 Loss Reporting Review Questions Losses Reduced Based on Anticipated Date Required for All Claims Extraordinary Loss Event Code Subrogation Requires Reporting What? Official Ruling Denying Benefits Possible Answers Correction Reports Catastrophe Code Reportable Special Fund Reimbursements Absolutely No Accident Date Noncompensable Claim Fraudulent Claim 79 Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage 80 40

41 Indemnity Losses Claim Reserves Compensation Benefits Claimant Attorney Fees (also in Claimant Attorney Incurred Fee Field) Vocational Rehabilitation Employer Liability Losses (Including ALAE) Awards Penalties for Delays in Compensation Payments Expenses Benefiting the Claimant 81 Medical Losses Claim Reserves Doctor and Hospital Payments Physical Rehabilitation Impartial Examinations Clinical Medical Other Medical Items Transportation Expenses, etc. Bonuses or Return-to-Work Incentives Expenses Benefiting the Claimant 82 41

42 Allocated Loss Adjustment Expense (ALAE) Expenses Allocated to Specific Claims Attorney Fees (Staff or Hired) Court Expenses, Dispute Resolution Medical Cost Containment Claim Expenses Required by Statute or Regulation 83 Unallocated Loss Adjustment Expense (ULAE) Expenses Excluded from Unit Statistical Reporting Carrier Employee Salaries, Overhead, Travel Fees paid to Independent Claim Services or Attorneys when performing Claim Adjuster Duties 84 42

43 Case Study 85 DemoNators Claim Example Richard and Lynette, DemoNator employees based in home office in Boca Raton, FL Scheduled for a demo job in Peachtree, GA Drive up to Georgia on Monday, October 13 On the job on Tuesday, October 14 Accident happens on Tuesday afternoon, during the demo job

44 DemoNators Claim Example We got a big demo job let s pack our gear! Lots of TNT! 87 DemoNators Claim Example Let s hit the road! Peachtree, Georgia here we come! Caution TNT LOAD 88 44

45 Claim Event Richard, this is an awesome demo! Yep. Got all your TNT ready? Yup, got my trusty TNT belt. Ready to blow stuff up! 89 Claim Event Ooops! 90 45

46 Claim Event Hang in there, Richard! I called for the Medevac! 91 Case Study Reporting the Claim I have a claim to report I kind of ran over Richard. The brakes did not work! I ll provide that info to the insurance company DemoNators have a claim. Let the adjuster know that the equipment may have been faulty. Got it. Looks like a subrogation opportunity

47 Claim Event Sorry for running you over, Richard. My bad, I was in the way. Is my chainsaw OK? 93 Claim Fact Sheet Claimant run over by bulldozer multiple injuries to entire body Accident occurred in Georgia claimant receiving Georgia benefits Inspection confirmed that faulty brakes caused the accident Subrogation from manufacturer is in progress Claimant receiving Medical and Indemnity benefits Doc visits Hospital stay Meds Physical rehabilitation Job evaluation/testing 94 47

48 Claim Event Richard, I found out that the bulldozer s brakes were defective! Lynette, its good to be back on the job! 95 Claim Event Yep, our insurance company is going to recover our claim. Oh good, so our premium is not jacked up! 96 48

49 Carrier Claim System Injury Type Permanent Partial Injury Part, Nature, Cause Multiple Body Parts, Multiple Injuries, Motor Vehicle Exposure State FL 09 Accident State GA 10 Jurisdiction State GA 10 Wage Loss Benefits $20,000 Hospital Payments $40,000 Medical Treatments $20,000 Physical Therapy $15,000 Job Evaluation/Testing $5,000 Subrogation $25,000 Subrogation Expenses $5,000 Medical Cost Containment $3,000 Claim Adjuster Time 15 hours 97 Claim Dollar Mapping Claim Mapping Carrier System to Unit Reporting Claim Components Claim System Wage Loss Benefits $20,000 Indemnity Medical ALAE ULAE Hospital Payments $40,000 Medical Treatments $20,000 Physical Therapy $15,000 Job Evaluations/Testing $5,000 Subrogation $25,000 Subrogation Expenses $5,000 Medical Cost Containment Claim Adjuster Time $3, hours 98 49

50 Loss Reporting Subrogation Subrogation Recovery $25,000 Subrogation Expense $5,000 Incurred Loss Calculation $100,000 - ($25,000 - $5,000) = $80,000 Claim Status Injury Type Accident State Jurisdiction State Part of Body Nature of Injury Cause of Injury Open PP 09 GA GA Multiple Multiple 90 Motor Vehicle 50 Act Type of Loss Type of Recovery Type of Claim Type of Settlement Incurred Indemnity Incurred Medical ALAE State 01 Traumatic 01 Subrogation 03 W/C Only 02 Not Subject 00 $20,000 $60,000 $3, Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage

51 Nonreportable Claims As of the 1st report valuation Claims closed without payments and ALAE Claims with Accident Dates outside of the Policy Period are not reportable when: No corresponding exposure Required due to official ruling 101 Loss Reporting Accident Date Catastrophe Claims Noncompensable/Fraudulent Claims Subrogation/Second Injury Funds Indemnity, Medical, and ALAE Nonreportable Claims Pension Table Usage

52 Pension Table Overview Determining the present value of expected lifetime benefit payments Applies to death and permanent total claims that result in lifetime benefits Incurred loss = total of all paid and outstanding indemnity and medical amounts as of the valuation date 103 Pension Tables Statistical Plan Statistical Plan for Workers Compensation and Employers Liability Insurance Part 7: Overview, Applicability, Terminology, and Effective Dates Pension Table Usage Guide 19 Pension Tables and 4 Examples

53 Pension Table Information Benefit Type (Fatal or Permanent Total) Jurisdiction State Act or USL&HW Accident Date Claimant Gender and Age Spouse s Age Age at widowhood Attained age Weekly Benefit at Injury Escalation Rate 105 Claim Scenario Death Claim Arkansas Accident Date: 3/10/14 Age 56 at Widowhood Remarried at Age 63 Policy Effective Date (PED): 4/1/13 3/31/14 5/1/58 (Widow s Date of Birth)

54 Claim Scenario 107 Claim Scenario Attained age at widowhood Surviving Spouse Pension Table (I-A) Age (X) X X+1 X+2 X+3 X+4 X+5 Attained Age Annuity Value at Attained Age

55 Claim Scenario (1st Report) $ $19,500 Surviving Spouse Pension Table (I-A) Age (X) X X+1 X+2 X+3 X+4 X+5 Attained 1 Age $19, $321,497 Reserve Portion of Incurred Indemnity 109 Multiple Record Reporting

56 Multiple Record Reporting Deductibles Statistical Codes With Losses Losses Without Payroll 111 Deductibles NCCI-Filed Small Deductibles Independently Filed Small Deductibles Independently Filed Large Deductibles

57 Deductible Statistical Codes Stat Code Premium Program Premium Adjustment 9663 Deductible Credit 9664 Deductible Credit 9657 Deductible Credit Placement Not Subject to Experience Rating Subject to Experience Rating Not Part of Standard Premium NCCI Program Yes Yes No Carrier Program Yes Yes Yes 113 Deductible Resources Statistical Plan Provides rules for reporting deductible programs and Deductible Reimbursement Unit Statistical Reporting Guidebook Part 8 is dedicated to reporting deductible programs State Effective Date FL 7/1/95 Deductible Type Medical and Indemnity Small Deductible State Guide (USRG Part 8-F) Type of Plan Per Claim Deductible Amount $ 5,000, 10,000, 15,000, 20,000, 25,000, 50,000, 75,000 Stat Code Net or Gross Deductible Reimbursement 9664 Gross Report

58 DemoNators Deductible Deductible Type Type of Plan Header Record 03 (Indemnity and Medical) 01 (Per Claim) Exposure Record Stat Code 9664 Deductible Reimbursement Loss Record $0 since this is a Gross Program 115 Statistical Plan Rules Losses are reported at their full (gross) value Gross Programs Deductible Reimbursement is 0 Net Programs Deductible Reimbursement is reported, subject to state special rules Reimbursement received between report levels is reported at the next unit report level With some state exceptions

59 Small Deductible Programs Include NCCI-filed and carrier independently filed programs NCCI files small deductible programs with state insurance departments NCCI small deductible programs may provide: Premium Credit Deductible Reimbursement Policy Credit Reduced Losses for Experience Rating 117 Net vs. Gross Deductibles Indemnity Losses $$$ Net Programs Medical Losses $$$ Deductible Reimbursement $$$ Incurred Loss Deductible Reimbursement = Losses Used for Experience Ratings Indemnity Losses $$$ Gross Programs Medical Losses $$$ Deductible Reimbursement 0 Incurred Loss Is Used for Experience Ratings

60 Carrier Independently Filed Large Deductibles No NCCI-filed large deductible programs Generally include deductibles of $100,000 and greater, but vary by state State exceptions for small and large deductible programs can be found in Part 8-G in the Unit Statistical Reporting Guidebook 119 Multiple Record Reporting Deductibles Statistical Codes With Losses Losses Without Payroll

61 Statistical Codes With Losses Supplemental disease exposure Asbestos, Atomic Energy, Incidental Foundry, Abrasive or Sandblasting Hazards Nonratable exposure, rate, and premium are charged and reported separately from the class code exposure Same statistical code must be reported on both the exposure and loss records Exposure Reported under the appropriate statistical codes Premium Reported under the appropriate statistical codes Losses Reported under the appropriate statistical codes 121 Multiple Record Reporting Deductibles Statistical Codes With Losses Losses Without Payroll

62 Losses Without Payroll Losses require corresponding exposure Classification code must match for exposure and loss Losses without payroll may be due to: Inaccurate exposure class Misclassified loss class code Edits that identify losses without payroll: (Staging Relational) and (Net) 123 Mini Quiz

63 Individual Risk Rating Plan Question The accident could impact what rating program on our DemoNators policy? a. Schedule Rating b. Workplace Safety Program c. Drug-Free Workplace 125 Subrogation Question a. Gave funds to Richard to buy a new chainsaw b. Recovery reduced losses used in Experience Rating c. Lynette bought more TNT What happened to the subrogation recovery?

64 Deductible Question a. Yep, we had a Net Deductible Program b. Nope, there was no deductible on our policy c. Nope, the $5,000 deductible was on a Gross Program Were our claims eligible for net reduced losses? 127 Wobbly Wheel Game Pass Through-Not Premium Reported in Medical Loss Company Use Stat Codes Duration of Coverage Report Actual Accident Date Requires Reducing Losses via Corrections Demo and Salvage Split Period Indicators (0-9)

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67 Supplemental Information

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69 Presenter Biographies Lynette Williams currently works in the Data Services Department of NCCI s Data Resources Division; she has been with NCCI for nearly 20 years. Lynette s primary responsibilities include product/project support as well as technical writing for data reporting manuals, circulars, and Web articles. She is also responsible for external training, including NCCI s Webinars on Demand modules. Lynette has held positions in Customer Operations, Inspection/Test Audit, and Regulatory Assurance. Her wealth of experience includes analyzing and researching classifications/statistical codes, compliance rules interpretation, and industry training. Lynette holds a bachelor of science degree in business management from Fairfield University in Connecticut and an MBA degree in business administration from the University of Phoenix. Richard Saltzman has more than 30 years of experience in the insurance industry, including 20 years of insurance company experience. Richard works in Statistical Services, and his responsibilities include data reporting compliance projects, industry communications, and NCCI s data reporting manuals.