Financial Calls Additional Premium/Loss Considerations

Transcription

1 Financial Calls Additional Premium/Loss Considerations Presented by: Julie Gonzalez Objective Focus on specific experience types and the resulting premium and loss considerations for Financial Call reporting: Certain policy types Premium programs/elements 2 1

2 Agenda Premium Components Loss Components Included and Excluded Experience 3 Three Categories of Earned Premium Net Earned Company rates, including Loss Cost Multiplier or any other approved deviation Standard Earned at Company Level Company rates, including Loss Cost Multiplier or any other approved deviation Standard Earned at DSR Level NCCI filed and state approved loss cost or rate level (NCCI DSR Levels) Include all adjustments (debits, credits, surcharges, assessments, and discounts) Reconcile to premium reported on NAIC Annual Statement and Call #8 Include individual risk experience modification Exclude any other risk specific adjustments (e.g. premium discounts, schedule rating, independent carrier filings, retrospective rating adjustments) Prior to the application of company specific rate deviations or loss cost expense multipliers Represents pure premium generated if coverage were written at an NCCI rate (loss cost) level 4 2

3 Financial Call Reporting Guidebook Part 5 Premium Components Summary Chart Lists common and specific premium components Identifies when a premium component is included in specific premium category and DSR premium level X included in specific premium column. Empty cells not applicable in specific premium column or premium level Part 6 Additional Requirements for Experience Corresponding statistical codes are found in NCCI s Statistical Plan 5 Statistical Plan Statistical Codes Part 6 Coding Values H. Statistical Codes Three separate tables Subject to Experience Modification Factor Not Subject to Experience Modification Factor Not Part of Standard Premium Standard Earned at Company Level Premium is not the same as Standard Premium related to policy premium calculation or Unit Statistical Data Example: Schedule Rating is not in Company Standard Earned Premium 6 3

4 NCCI Filed Programs NCCI-Filed Programs: Contracting/Construction Premium Adjustment Program (CCPAP) Drug-Free Workplace Managed Care, including Colorado Designated Medical Provider Program Georgia Managed Care Arrangement Premium Credit Program Workplace Safety, including Colorado Certified Risk Management Programs Florida Employer Safety Premium Credit Program Utah Workplace Safety Program 7 Statistical Plan Description Stat Code Credit ( ) Debit (+) Subject to Experience Modification Factor Drug Free Workplace 9841 Managed Care 9843 Workplace Safety (Florida) 9765 Not Subject to Experience Modification Factor Contracting/Construction Premium Adjustment Program 9046 Drug Free Workplace 9846 Managed Care 9874 Workplace Safety Credit 9880 Workplace Safety Debit(Utah Workplace Safety Program) Risk Management Premium Credit Program (experience rated and/or 9883 schedule rated insureds) (Colorado) Risk Management Premium Credit Program (insureds who do not qualify for experience rating and/or schedule rating) (Colorado)

5 Texas Certified WC Health Care Network For Financial Calls, not reported the same as Managed Care Credits Included in Net premium only Statistical Plan Description Certified Workers Compensation Healthcare Network (Texas) (Not Subject to Experience Modification Factor) Stat Code 9874 Credit ( ) Debit (+) 9 Independent Filings Independent Filed Premium Programs, including: Arkansas Managed Care Arrangement Premium Credit Program Filed with Arkansas Insurance Department Oklahoma Certified Workplace Medical Plan independently file and receive approval from Oklahoma Insurance Department Deviations of NCCI Filed Premium Programs Included in Net premium only 10 5

6 Statistical Plan Description Stat Code Independent Carrier Filing Premium Credit Applied Before Experience 9721 Modification Independent Carrier Filing Premium Debit Applied Before Experience 9723 Modification Independent Carrier Filing Premium Credit Applied After Experience Modification 9722 Independent Carrier Filing Premium Debit Applied After Experience Modification 9724 Independent Carrier Filing Premium Credit Not Part of Standard Premium Independent Carrier Filing Premium Debit Not Part of Standard Premium 9656 Managed Care (Arkansas Voluntary Market) (Subject to Experience Modification 9843 Factor) Certified Workplace Medical Plan (Oklahoma) (Not Subject to Experience Modification Factor) 9756 Credit ( ) Debit (+) 11 Deductible and Schedule Rating Programs Deductible and Schedule Rating premium components are treated the same regardless if NCCI filing or Independent Carrier filing. Included in Net premium only Except Kentucky (all premium is net of deductible credits) Schedule Ratings Programs Includes Missouri Risk Modeling Plan Nebraska Flexible Rating Texas Modeled Rating Factor 12 6

7 Statistical Plan Description Stat Code Credit ( ) Debit (+) Deductible Reporting Subject to Experience Modification Factor 9664 Deductible Reporting Not Subject to Experience Modification Factor 9663 Deductible Reporting Not Part of Standard Premium 9657 Schedule Rating Program (Not Subject to Experience Modification Factor) 9887 Schedule Rating Program (Not Subject to Experience Modification Factor) Schedule Rating Program Premium Credit Not Part of Standard Premium 9750 Schedule Rating Program Premium Credit Not Part of Standard Premium Risk Modeling Plan Premium Credit (Missouri Risk Modeling Plan) (Texas Modeled Rating Factor) Risk Modeling Plan Premium Debit (Missouri Risk Modeling Plan) (Texas Modeled Rating Factor) Flexible Rating Adjustment Premium Credit (Nebraska Flexible Rating) 9658 Flexible Rating Adjustment Premium Debit (Nebraska Flexible Rating) Deviation from NCCI Rates or Loss Costs Carriers may be permitted to file company deviations from NCCI rates or loss costs Effects of this deviation Need to keep track Deviation from NCCI Rates Include deviations in Net and Company Standard Premium Remove deviations when calculating rate state DSR Level Premium Deviation from NCCI Loss Costs Include approved Loss Cost Multiplier and deviations in Net and Company Standard Premium Remove LCM and deviations from state DSR Level Premium 14 7

8 Difference between Company Standard and DSR Assigned Risk Rate Approved Deviation from Assigned Risk Rates Report on Company Standard, but for DSR, use the NCCI filed rates Expense Constant Company Expense Constant different from NCCI filed expense constant Reported on Company Standard, but for DSR, use the NCCI filed expense constant 15 Balance To Minimum Premium Included in Company Standard and Net DSR Level Premium Included if rate state and all assigned risk business Excluded if loss cost state and in Texas Statistical Codes 0990 Minimum Premium (Balance to) 9848 Minimum Premium for Employers Liability (Balance to) 9849 Increased Limits for Admiralty and/or FELA Coverage Balance to Minimum Premium (only for years prior to January 1, 2003 where Maritime experience is included in the Financial Calls) 16 8

9 True or False? Credits for NCCI Filed Drug-Free Workplace Programs are included in all premium columns? True Credits for NCCI Filed Deductible Programs are included in all premium columns? False Credits for NCCI Filed Texas Certified WC Health Care Network program are included in all premium columns? False Credits for NCCI Filed Nebraska Flexible Rating Program are included in all premium columns? False 17 Premium Component Consideration Not all premium components will have a statistical code, but may need to be considered Retrospective Rated Policies Loss Sensitive Rating Plans Report Audited premium in DSR Level, Company Standard, and Net Premiums Retro Adjustments Included in Net premium only, excluded from DSR Level and Company Standard Premiums 18 9

10 Additional Requirements Inclusion and exclusion of certain types of experience (items) Unless specified as Experience Excluded All workers compensation policy year and calendar-accident experience is reportable under the applicable Call 19 Large Deductibles For Financial Call reporting, large deductible is defined as: $100,000 or more, whether the deductible is per claim, per accident, or on an aggregate basis Oregon Policies with deductibles of $75,000 or more per claim, per accident, or in aggregate Texas Policies with deductibles of more than: $25,000 per claim or per accident, or $100,000 in aggregate Exclude from premiums, losses, and DCCE, and account for data on Call #8 FL exception Large Deductible Calls 20 10

11 Other Than Large Deductibles Include premiums, losses, and DCCE in Ratemaking Calls Report on a gross basis (before the application of deductible credits or reimbursements) Exception of Net premium Calls #19 and #26 Kentucky exception (all premium is net of deductible credits) Premium Credits Include in Net Premium and exclude from DSR Level and Company Standard 21 Wrap Ups and Master Policies Consider all large deductible premium and losses under Wrap Up Programs, PEO master policies, retrospective rated policies Master Wrap-Up Policy that covers multiple years must be: Reported as separate policies with individual effective dates for each of the annual components Mirror PEDs reported on unit reports 22 11

12 Maritime and FELA Guidebook includes list of all maritime (Admiralty Law) and FELA class codes Exclude FELA/Maritime data from ratemaking calls, but report as a line item on Call #8 Include in supplemental calls (#1 #1D; #14, #19, #26 addendum to Call #19 section) 23 USL&HW Guidebook lists all F-class codes Exclude F-class data from ratemaking calls, but report as a line item on Call #8 Include Industrial Codes F Loaded Include in supplemental calls (#1 through #1D; #14, #19, #26 addendum to Call #19 only) 24 12

13 Federal Mine Safety and Health Act Underground Coal Mine: For all states, except Virginia, do not report any underground coal mine experience (traumatic, OD, and black lung) except as a reconciliation item on Call #8 Surface Coal Mine: For all states, except Virginia, report any surface coal mine experience for traumatic and OD other than black lung Do not report any surface coal mine experience for OD black lung, except as a reconciliation item on Call #8 VA experience for all coal mine risks is reported on VA statespecific coal mine calls (#32A, #32V, #33) 1165 Texas Coal Mine NOC Traumatic and OD other than Black Lung 25 Federal Mine Safety and Health Act 26 13

14 Domestic Worker Experience Experience included Include Domestic Worker Experience (premiums, losses, and expenses) written under workers compensation and employers liability policies in all Calls For per-capita class codes, divide by 10 and not by 100 when calculating your premium 27 Employers Liability Insurance Employers Liability (E/L) and E/L Increased Limits Include in DSR Level, Company Standard, and Net Premiums Separate instructions for E/L Balance to Minimum Premium Indemnity Claim Count/Large Loss claims Report as one claim when there s WC and E/L (Increased Limits) coverage DCCE associated with E/L should be reported in the Losses Use as a reason for Difference on Call #8 For Call #19, follow NAIC guidelines 28 14

15 Subrogation Subrogation When there is subrogation (or a recovery), reported loss amount must be the net incurred loss Subrogation Gross incurred loss minus the amount recovered (reduced by recovery expenses). Subrogation and other recoveries should not be applied to Defense and Cost Containment Expense (DCCE) 29 Second Injury Fund Anticipated SIF Recovery: All payments have been made and there are no case reserves for future payments Report claim as closed if there is an anticipated SIF recovery that may not be received for a number of years 30 15

16 Settlements Lump-Sum Settlement Losses Allocated between Medical and Indemnity (should not be an automatic 50/50 split) If subdivision is unknown or unspecified, use case values prior to settlement adjustments to determine the prorated reported amount for indemnity and medical. 31 Independent Medical Examinations Required by Industrial Accident Board Report as Medical Loss IME and all associated costs Benefit of injured worker Report as Medical Loss Medical Cost Containment Purpose of controlling cost to ensure only reasonable costs are incurred Report as DCCE 32 16

17 EBUB and IBNR Earned But Unbilled (EBUB) Properly Allocated by Policy Year Include Cannot Properly Allocate by Policy Year Exclude, but enter in Call #8 as reason for difference Incurred But Not Reported (IBNR) in Call #8 Removed from Calls for valuation 2011 Call #8 Report Calendar Year change 33 Reason for Differences Difference in premium from Calls to NAIC Statement Potential difference identified in Call #

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