Data Collection Agency Workers Compensation Insurances Statewide Average Pure Premium Michigan (2016)

Transcription

1 Data Collection Agency Workers Compensation Insurances Statewide Average Pure Premium Michigan (2016) Table of Contents 1. Circular Letter 2. Class Code Rating Values 3. Miscellaneous Values 4. Footnotes 5. Weighting & Ballast Values 6. Retrospective Rating Plans

2 COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN P.O. Box 3337 Livonia, MI (734) Fax (734) Internet WEB Site: September 8, 2015 CIRCULAR LETTER #281 TO ALL MEMBERS RE: DATA COLLECTION AGENCY WORKERS COMPENSATION INSURANCE STATEWIDE AVERAGE PURE PREMIUM MICHIGAN EFFECTIVE JANUARY 1, NEW AND RENEWAL BUSINESS ONLY Dear Member: This is to inform you that the enclosed statewide average pure premiums have been prepared in compliance with the Michigan Insurance Code. The indicated 1/1/2016 pure premiums represent an average decrease of 6.9% from the pure premiums effective 1/1/2015. The components of this change are as follows: Experience and Benefits Loss Based Expense Overall 8.2% decrease 1.4% increase 6.9% decrease By industry group, the average pure premium level changes are: Manufacturing Contracting Office and Clerical Goods and Services Miscellaneous 8.3% decrease 8.9% decrease 7.9% decrease 6.5% decrease 3.0% decrease Within each industry group, the changes will vary from the average classification depending upon the volume and character of the particular classification experience. Changes in certain miscellaneous rating values were made in proportion to the changes in the Michigan State Average Weekly Wage. IMPORTANT: These pure premiums are advisory. They are neither manual nor gross rates, but instead represent loss and loss adjustment costs per $100 of payroll. In accordance with the Michigan Insurance Code, the pure premiums exclude the following elements: a) Trend factors b) Profits c) Expenses, except loss adjustment expenses

3 CIRCULAR LETTER #281 Page 2 While provisions for general expenses; acquisition and field supervision expenses, taxes, licenses and fees, and profits and contingencies have been excluded, provisions for loss based expenses have been included. This year s pure premium analysis is based on data from the two most recent complete Policy Years (2013 & 2012). No material changes to the methodology were recognized in this year s analysis. The 5-year average for paid+case loss development factors continues to be utilized, after changing from the 3-year index effective 1/1/2015. Section C of Part III of this publication contains the indications based on several alternative methodologies, including methods using Accident Year 2014, as well as various loss development methodologies. Under Michigan s filing requirements, carriers may utilize the Data Collection Agency (DCA) pure premiums along with their own expense loadings, and they may introduce factors to consider different workers compensation experience. Carriers may introduce trend factors if they choose, and are also permitted to make their own rates completely independent of the DCA pure premiums. EXPERIENCE RATING NOTE: If your company plans to file any changes to its current Experience Rating Plan, including new ELR s and associated rating values, please notify us accordingly and submit a Rating Values form located here, Presently, we are planning on delaying the January modification promulgation until October 19 th in order to allow for the new values to be implemented. There are no additions to or deletions from the standard class codes included in this year s publication relative to last year. Volume I + II data, including Appendices B-II (Michigan A Sheets) and C-VI (Michigan Schedule Z Data) are available on our website in the member's only area. These sections contain the individual class experience. If you are your company s designated actuarial contact authorized to receive this background DCA data and have trouble accessing this area on our website, please contact our office. Very truly yours, Jon Heikkinen

4 Exhibit III MICHIGAN WORKERS COMPENSATION AND EMPLOYERS LIABILITY Page S1 CLASS LOSS D CLASS LOSS D CLASS LOSS D CLASS LOSS D CODE COST ELR RATIO CODE COST ELR RATIO CODE COST ELR RATIO CODE COST ELR RATIO a a a a P P P P M M M F F F /2015 Note: D-ratios reflect a $16,000 split point.

5 Exhibit III MICHIGAN WORKERS COMPENSATION AND EMPLOYERS LIABILITY Page S2 CLASS LOSS D CLASS LOSS D CLASS LOSS D CLASS LOSS D CODE COST ELR RATIO CODE COST ELR RATIO CODE COST ELR RATIO CODE COST ELR RATIO F F F F F M F M M * M M M M M M M M M M M M M M M F F F M M M F M M M a a a a * Refer to the Footnotes Page for additional information on this class code. Note: D-ratios reflect a $16,000 split point. 9/2015

6 WORKERS COMPENSATION AND EMPLOYERS LIABILITY MICHIGAN Exhibit III Page 4 MISCELLANEOUS VALUES Basis of premium applicable in accordance with the footnote instructions for Code "Taxicab Co. - Drivers": $28, Remuneration for Executive Officers Active Members LLC's Minimum $455/wk Athletic Teams and Traveling Carnivals Maximum $1,800/wk Remuneration for Spouse of Sole Proprietors - fixed amount Remuneration for Partners - fixed amount $18,700/yr $18,700/yr The loss costs on Exhibit III do not include pure premiums for foreign or domestic terrorism. The Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015 provides for partial reimbursement by the United States for insured workers compensation losses due to terrorism. Additional insurer loss liability exists under TRIPRA because TRIPRA provides partial reimbursement. In addition, TRIPRA is scheduled to expire at year-end United States Longshore and Harbor Workers' Compensation Coverage percentage applicable only in connection with Rule XI-D-3 "U.S. Longshore and Harbor Workers' Compensation Act" of the Basic Manual. 67% (Multiply a Non-'F' classification advisory loss cost by a factor of This factor adjusts for the differences in state and federal benefits and assessments. The factor to adjust for differences in benefits only is 1.61).

7 WORKERS COMPENSATION AND EMPLOYERS LIABILITY MICHIGAN Exhibit III Page 5 MISCELLANEOUS VALUES (continued) Loss Elimination Ratios for employers electing a $ deductible: The following percentages are applicable on a per claim basis by hazard group. These represent the percentage of loss eliminated by a selected deductible Hazard Group A B C D E F G $ % 15.6% 13.6% 10.1% 6.9% 5.0% 3.8% $ % 16.2% 14.1% 10.7% 7.4% 5.4% 4.0% $1, % 16.9% 14.7% 11.2% 7.8% 5.7% 4.3% $1, % 18.2% 15.9% 12.2% 8.7% 6.4% 4.8% $2, % 19.4% 17.0% 13.1% 9.5% 7.1% 5.3% $2, % 20.6% 18.0% 14.1% 10.4% 7.8% 5.8% NOTE: Basic Manual refers to the Basic Manual for Michigan Workers' Compensation.

8 WORKERS COMPENSATION AND EMPLOYERS LIABILITY MICHIGAN Exhibit III Page 3 FOOTNOTES a F M See instructions for rating in classification section under code description. Pure premium provides for coverage under the United States Longshore and Harbor Workers Compensation Act and its extensions. The pure premium contains a provision for the USL & HW assessment. Pure premium provides for coverage under Admiralty Law and Federal Employers' Liability Act (FELA). A provision for the USL & HW assessment is included for those classifications under Program II USL Act. The following classes are grouped by category for ratemaking purposes: Category Program I Program II State Program II USL&HW Railroad Construction Vessels - NOC Boats- Livery - Under 15 ton Vessels - Not Self-Propelled Railroad Operations Dredging - All Types Diving, Salvage, Wrecking - Marine Railroad: Sales, Collectors or Messenger Railroad: Clerical Office - NOC Pure Premiums are derived based on Program II State and then adjusted to Program I by a factor of.900 and Program II USL & HW by a factor of P Classification is computed on a per capita basis. * Class codes with special footnotes: 7720 When part-time or volunteer police officers are employed, the actual remuneration of all such persons shall be included with the payroll of regular police officers in computing the premium. In no case, however, shall the remuneration of any such police officers be taken at less than $400 per person per annum.

9 EXHIBIT III MICHIGAN EXPERIENCE RATING PLAN MANUAL PART FIVE TABLE OF BALLAST VALUES Page 7 APPLICABLE TO ALL POLICIES Expected Ballast Expected Ballast Expected Ballast Losses Values Losses Values Losses Values 0-34,693 16,125 1,113,277-1,145, ,000 2,241,700-2,273, ,875 34,694-59,710 19,350 1,145,509-1,177, ,225 2,273,945-2,306, ,100 59,711-88,455 22,575 1,177,741-1,209, ,450 2,306,191-2,338, ,325 88, ,779 25,800 1,209,975-1,242, ,675 2,338,436-2,370, , , ,841 29,025 1,242,209-1,274, ,900 2,370,682-2,402, , , ,293 32,250 1,274,445-1,306, ,125 2,402,928-2,435, , , ,972 35,475 1,306,681-1,338, ,350 2,435,174-2,467, , , ,795 38,700 1,338,917-1,371, ,575 2,467,420-2,499, , , ,713 41,925 1,371,155-1,403, ,800 2,499,666-2,531, , , ,699 45,150 1,403,393-1,435, ,025 2,531,913-2,564, , , ,733 48,375 1,435,631-1,467, ,250 2,564,159-2,596, , , ,804 51,600 1,467,870-1,500, ,475 2,596,405-2,628, , , ,903 54,825 1,500,109-1,532, ,700 2,628,652-2,660, , , ,023 58,050 1,532,349-1,564, ,925 2,660,899-2,693, , , ,162 61,275 1,564,589-1,596, ,150 2,693,145-2,725, , , ,314 64,500 1,596,830-1,629, ,375 2,725,392-2,757, , , ,478 67,725 1,629,071-1,661, ,600 2,757,639-2,789, , , ,651 70,950 1,661,313-1,693, ,825 2,789,886-2,822, , , ,833 74,175 1,693,554-1,725, ,050 2,822,133-2,854, , , ,022 77,400 1,725,796-1,758, ,275 2,854,380-2,886, , , ,216 80,625 1,758,039-1,790, ,500 2,886,627-2,918, , , ,416 83,850 1,790,281-1,822, ,725 2,918,875-2,951, , , ,620 87,075 1,822,524-1,854, ,950 2,951,122-2,983, , , ,828 90,300 1,854,767-1,887, ,175 2,983,369-3,015, , , ,040 93,525 1,887,010-1,919, ,400 3,015,617-3,047, , , ,254 96,750 1,919,254-1,951, ,625 3,047,864-3,080, , , ,471 99,975 1,951,498-1,983, , , , ,200 1,983,742-2,015, , , , ,425 2,015,986-2,048, , , , ,650 2,048,230-2,080, , , , ,875 2,080,475-2,112, , ,362-1,016, ,100 2,112,719-2,144, ,975 1,016,589-1,048, ,325 2,144,964-2,177, ,200 1,048,817-1,081, ,550 2,177,209-2,209, ,425 1,081,046-1,113, ,775 2,209,454-2,241, ,650 For Expected Losses greater than 3,080,111, the Ballast Value can be calculated using the following formula (rounded to the nearest 1): Ballast = (0.10) x (Expected Losses) x (Expected Losses) x (6.45) / [Expected Losses + (700) x (6.45)] Cap on Modifications = (0.0004) x [(Expected Losses) / (6.45)]

10 EXHIBIT III MICHIGAN EXPERIENCE RATING PLAN MANUAL PART FIVE TABLE OF WEIGHTING VALUES Page 6 APPLICABLE TO ALL POLICIES Expected Weighting Expected Weighting Losses Values Losses Values 0-1, , , ,351-5, , , ,461-9, , , ,658-13, , , ,946-18, , , ,328-30, ,386-1,055, ,655-45, ,055,033-1,115, ,631-58, ,115,517-1,180, ,953-71, ,180,243-1,249, ,923-84, ,249,675-1,324, ,895-98, ,324,343-1,404, , , ,404,866-1,491, , , ,491,960-1,586, , , ,586,464-1,689, , , ,689,366-1,801, , , ,801,838-1,925, , , ,925,281-2,061, , , ,061,382-2,212, , , ,212,195-2,380, , , ,380,241-2,568, , , ,568,655-2,781, , , ,781,378-3,023, , , ,023,439-3,301, , , ,301,359-3,623, , , ,623,744-4,002, , , ,002,194-4,452, , , ,452,727-4,998, , , ,998,106-5,671, , , ,671,806-6,525, , , ,525,157-7,641, , , ,641,074-9,162, , , ,162,775-11,360, , , ,360,784-14,814, , , ,814,791-21,031, , , ,031,997-35,538, , , ,538, ,072, , , ,072,770 AND OVER , , , , , , (a) State Per Claim Accident Limitation $161,500 (b) State Multiple Claim Accident Limitation $323,000 (c) USL&HW Per Claim Accident Limitation $469,500 (d) USL&HW Multiple Claim Accident Limitation $939,000 (e) Employers Liability Accident Limitation $60,000 (f) USL&HW Act -- Expected Loss Factor -- Non-F Classes % Cap on Modifications = (0.0004) x [(Expected Losses) / (6.45)]

11 RETROSPECTIVE RATING PLAN MANUAL Michigan STATE SPECIAL RATING VALUES RR 1 Original Printing 1. Hazard Group Differentials* A B C D E F G Table of Expected Loss Ranges* Effective January 1, Excess Loss Pure Premium 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, This loss limit is not applicable for retrospective rating in this state * Source: NCCI

12 RETROSPECTIVE RATING PLAN MANUAL Michigan STATE SPECIAL RATING VALUES RR 2 Original Printing Excess Loss and Allocated Expense Pure Premium 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, This loss limit is not applicable for retrospective rating in this state