Georgia Residual Market State Activity Report

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1 Georgia Residual Market State Activity Report

2 Executive Summary NCCI, as Pool and Plan Administrator of the Georgia Workers Compensation Insurance Plan, is pleased to provide the Georgia 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 Georgia Plan. Residual Market demographics contained in this report include: Table of Contents Residual Market Total Policies and Premium in Force... 1 Georgia Residual Market Reinsurance Pool Booked Loss Ratio... 2 Georgia Residual Market Reinsurance Pool Ultimate Net Written Premium... 2 Georgia Residual Market Reinsurance Pool Net Operating Results... 3 Collections/Indemnification... 4 Voluntary Coverage Assistance Program... 5 Total Applications Bound... 6 Total Application Premium Bound... 7 Residual Market Total Policy Counts... 8 Residual Market Total Premium Volume... 8 Total Premium Distribution by Size of Risk... 9 Residual Market Top 10 Classification Codes by Policy Count Residual Market Top 10 Classification Codes by Premium Volume 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 22,090 20,963 1, % Premium Volume $66,399,614 $65,954,925 $444, % Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 1

4 Georgia 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. Percentage 150% 100% 50% 0% Booked Loss Ratio 106.0% 110.0% 88.8% 95.4% Georgia 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. Ultimate Premium $80,000 $60,000 $40,000 $20,000 $0 $58,834 $58,345 $48,075 $55, 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

Georgia 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

5 Georgia 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. Incurred Losses Including IBNR (000)'s $100,000 $80,000 $60,000 $40,000 $20,000 $0 $62,364 $64,180 $53,090 $42, Policy Year Georgia 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 ($30,894) Policy Year ($28,782) ($21,870) 2013 ($16,730) -$40,000 -$34,000 -$28,000 -$22,000 -$16,000 -$10,000 -$4,000 $2,000 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 Georgia 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 $59,118,067 $11,043, % 2014 $69,525,642 $13,876, % 2015 $73,011,152 $13,928, % 2016 $71,125,238 * N/A 2017 $41,225,630 * 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 Voluntary Coverage Assistance Program Annual Data through December 31, 2017 The volume of assigned risk applications redirected to the voluntary market through NCCI s VCAP Service. The following shows the results VCAP Service has provided during Number of Applications Reviewed by VCAP Service 12,068 Number of VCAP Service Matches 8,286 VCAP Service Offers as a % of Matches 1.01% Number of Confirmed VCAP Service Policies 84 Confirmed VCAP Service Policies as a % of Applications Reviewed 0.70% Savings as a % of Redirected Assigned Risk Premium 33.19% Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 5

8 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). 3,500 3,000 2,921 Applications Bound 2,500 2,000 1,500 1, st Qtr 2nd Qtr 3rd Qtr 4th Qtr Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 6

Total Application Premium Bound 2014 vs. 2015 vs. 2016 vs.

9 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). $10,000,000 $8,000,000 $7,708,923 Premium Bound $6,000,000 $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. 7

Residual Market Total Policy Counts Annual Data for Policies Reported through December 31, 2017

2017 Policy Year Residual Market Total Premium Volume Annual Data Reported through December 31,

period $70,000,000 $68,137,940 $67,735,817 $68,000,000 $66,000,000 $63,596,139 Premium Volume

10 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. 25,000 18,475 19,679 21,356 22,380 20,000 Number of Policies 15,000 10,000 5, 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. $70,000,000 $68,137,940 $67,735,817 $68,000,000 $66,000,000 $63,596,139 Premium Volume $64,000,000 $62,000,000 $61,593,189 $60,000,000 $58,000,000 $56,000, Policy Year Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 8

11 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 $ , % $23,124, % $1,270 $ , % $6,435, % $3,509 $ , % $8,609, % $6,937 $ % $9,167, % $13,805 $ % $9,451, % $29,720 $ % $6,259, % $69,548 $ % $2,822, % $128,317 $ % $1,864, % $372,895 Total 22, % $67,735, % $3,027 Annual 2016 Data for Comparison Premium Interval Policy Count % of Total Policies Total State Premium % of Total Premium Average Premium $ , % $20,765, % $1,214 $ , % $6,636, % $3,507 $ , % $8,847, % $6,972 $ % $8,940, % $13,797 $ % $10,416, % $30,017 $ % $4,875, % $69,652 $ % $3,830, % $132,095 $ % $3,825, % $382,543 Total 21, % $68,137, % $3,191 Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 9

12 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 Carpentry Construction of Residential Dwellings Not Exceeding Three Stories in Height 2, % Painting NOC & Shop Operations Drivers 2, % Carpentry-Installation of Cabinet Work or Interior Trim 1, % Roofing-All Kinds & Drivers 1, % Wallboard Sheetrock Drywall Plasterboard or Cement Board Installation Within Buildings 1, % Trucking-Local Hauling Only-& Drivers % Janitorial Services by Contractors-No Window Cleaning Above Ground Level & Drivers % Masonry NOC % Ceramic Tile Indoor Stone Marble or Mosaic Work % Carpet Linoleum Vinyl Asphalt and Rubberfloor Tile Installation % 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 Carpentry Construction of Residential Dwellings Not Exceeding Three Stories in Height $6,625, % Roofing-All Kinds & Drivers $5,098, % Painting NOC & Shop Operations Drivers $4,793, % Carpentry-Installation of Cabinet Work or Interior Trim $3,443, % Wallboard Sheetrock Drywall Plasterboard or Cement Board Installation Within Buildings $3,286, % Trucking-Local Hauling Only-& Drivers $2,434, % Masonry NOC $2,239, % Janitorial Services by Contractors-No Window Cleaning Above Ground Level & Drivers $1,806, % Excavation & Drivers $1,644, % Concrete or Cement Work- Floors Driveways Yards or Sidewalks-& Drivers $1,364, % Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved. 10

13 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. 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. 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. VCAP Service Voluntary Coverage Assistance Program is a supplemental program to NCCI s Workers Compensation Insurance Plan. As part of NCCI s strategic vision of maintaining and depopulating the residual market, NCCI s VCAP Service redirects coverage opportunities for employers to voluntary market insurers, which generally provide coverage at a lower cost. VCAP Service provides an additional source for producers and employers to secure voluntary workers compensation coverage prior to entering the residual market for coverage. 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. 11

Tennessee Residual Market State Activity Report

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