Mississippi October 26, 2018 Laura_Hart_Bryan@ncci.com 225-635-4481 Kelly_Briggs@ncci.com 561-893-3069
Mississippi State Advisory Forum The Future@Work Video Countrywide Workers Compensation System Mississippi s Workers Compensation System Mississippi Kids Chance Countrywide and Mississippi Labor Markets The Data Connection Video Legislative Issues Opioids and Workers Compensation Residual Market: Countrywide and Mississippi Guest Speaker Barrett Hathcock, Manager, Compensation Insurance Services 2
The Future@Work Video
Countrywide Workers Compensation System
Countrywide Workers Compensation (WC) An Overview Premium decreased slightly in the most recent year The combined ratio continues to show favorable results Frequency declined again at the latest point Medical and indemnity severity increased modestly 5
WC Net Written Premium Private Carriers and State Funds $ Billions 50 State Funds 47.8 45.6 45.0 40 Private Carriers 30 20 37.8 40.1 39.8 10 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Calendar Year p Preliminary Source: NAIC s Annual Statement data; includes state insurance fund data for the following states: AZ, CA, CO, HI, ID, KY, LA, MD, MO, MT, NM, OK, OR, RI, TX, and UT Each calendar year total for state funds includes all funds operating as a state fund in that year 6
WC Direct Written Premium (DWP) Change by Component Private Carriers NCCI States Change in Direct Written Premium: 0.0% 2017 vs. 2016 Payroll +4.4% Loss Cost and Mix -4.2% Carrier Discounting +0.4% Other Factors -0.4% Sources: DWP Change: NAIC s Annual Statement Statutory Page 14 for all states where NCCI provides ratemaking services Components: NCCI s Policy data 7
Increases in Payroll Continue to Drive Changes in Premium Forecast Change 2016 2017 Payroll Wage Rate +3.4% Employment +1.6% +1.8% 4% 3% 2% 1% 4% 3% 2% 1% Prof. & Business Services Trade, Transport., & Utilities Education & Health Services Manufacturing Financial Construction Leisure & All Other Activities Hospitality Prof. & Business Services Trade, Transport., & Utilities Education & Health Services Manufacturing Financial Construction Leisure & All Other Activities Hospitality Sources: Moody s Analytics and NCCI 8
WC Approved Changes in Bureau Premium Level Weighted by Effective Date NCCI States Percent 5 0-5 -5.4-10 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18p Calendar Year -9.7 p Preliminary Source: NAIC s Annual Statement Statutory Page 14 Values reflect changes in average premium levels between years, based on approved changes in advisory rates, loss costs, assigned risk rates, and rating values IN and NC are filed in cooperation with state rating bureaus 9
WC Impact of Discounting on Premium Private Carriers NCCI States Percent 5 0.5-5 -15-25 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Policy Year p Preliminary Sources: NAIC s Annual Statement Statutory Page 14 and NCCI s Financial Call data Rate/loss cost departure reflects carrier departure from NCCI s rate level, which excludes a profit and contingency provision and expense constant Based on data for all states where NCCI provides ratemaking services, excluding TX 10
WC Combined Ratio Underwriting Gain Achieved Private Carriers Percent 122 115 93 89 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p p Preliminary Source: NAIC s Annual Statement data Calendar Year 11
WC Combined Ratio by Component Private Carriers Percent Dividends 1 2 Underwriting Expense Ratio 25 26 Loss Adjustment Expense (LAE) Ratio 14 13 Loss Ratio 53 49 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p p Preliminary Source: NAIC s Annual Statement data Calendar Year 12
WC Net Combined Ratios Calendar Year vs. Accident Year As Reported Private Carriers Percent 125 Calendar Year Accident Year 100 94 95 89 99 75 50 25 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p p Preliminary Source: NAIC s Annual Statement data Accident Year information is reported as of 12/31/2017 Includes dividends to policyholders 13
WC Lost-Time Claim Frequency Claims per $1M Pure Premium, Private Carriers and State Funds NCCI States Percent 5 0-5 Average Annual Change: 3.7% (1997 2016) -6.2-6 -10 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Accident Year 2010 and 2011 adjusted primarily for significant changes in audit activity p Preliminary based on data valued as of 12/31/2017 Source: NCCI s Financial Call data, developed to ultimate, premium adjusted to current wage and voluntary pure premium level, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2011 14
WC Average Indemnity Claim Severity Private Carriers and State Funds NCCI States Severity ($ Thousands) 25 2.7% 4% 20 15 10 $23.4 $24.4 5 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Accident Year p Preliminary based on data valued as of 12/31/2017 Source: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 15
Relative Growth Rates Indemnity Severity vs. Wage Inflation Private Carriers and State Funds NCCI States Changes in indemnity claim severity outpaced changes in wage inflation by 1.9% per year, on average Indemnity claim severity and wages grew at a similar rate 97 98 99 00 01 02 03 04 05 06 07 07 08 09 10 11 12 13 14 15 16 17p Accident Year Accident Year p Preliminary based on data valued as of 12/31/2017 Sources: Severity: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 US Average Weekly Wage: 1995 2007 and 2012 2016, Quarterly Census of Employment and Wages; 2008 2011, NCCI; 2017p, NCCI and Moody s Analytics 16
WC Average Medical Lost-Time Claim Severity Private Carriers and State Funds NCCI States Severity ($ Thousands) 30 6.0% 4% 25 20 15 10 $28.8 $29.9 5 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Accident Year p Preliminary based on data valued as of 12/31/2017 Source: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 17
Relative Growth Rates Medical Severity vs. Price Inflation Private Carriers and State Funds NCCI States Medical lost-time claim severity grew approximately 4.5% per year faster than medical care prices Change in Medical lost-time claim severity and medical care prices tracked one another 97 98 99 00 01 02 03 04 05 06 07 07 08 09 10 11 12 13 14 15 16 17p Accident Year Accident Year p Preliminary based on data valued as of 12/31/2017 Sources: Severity: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 Personal Health Care (PHC) Chain-Weighted Price Index: Centers for Medicare & Medicaid Services 18
Mississippi s Workers Compensation System
Mississippi Workers Compensation System An Overview Premium volume has been stable in recent years Combined ratios continue to show favorable results Claim frequency continues to decline 20
Mississippi Workers Compensation Premium Volume Direct Written Premium in $ Millions 400 300 354 354 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Calendar Year Source: NAIC s Annual Statement data 21
Impact of Discounting on Workers Compensation Premium in Mississippi 10 5 3.9 0-5 -10 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Policy Year p Preliminary Based on data through 12/31/2017 22
Mississippi Combined Ratios 100 97 94 91 91 90 2013 2014 2015 2016 2017 Accident Year Sources: NCCI s financial data through 12/31/2017 and NAIC s Annual Statement data 23
Mississippi Combined Ratios by Component Dividends 0.2 Expense Ratio 37.0 Loss Ratio 52.3 2013 2014 2015 2016 2017 Accident Year Sources: NCCI s financial data through 12/31/2017 and NAIC s Annual Statement data 24
Mississippi Workers Compensation Percent Change in Lost-Time Claim Frequency Percent Change 10 5 Cumulative Change of 39.5% (2002 2016) 0-5 -3.2-2.0-10 -15 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, on-leveled and developed to ultimate, premium adjusted to common wage level 25
Mississippi Average Indemnity Claim Severity Lost-Time Claim Severity in $ Thousands 25 20 Cumulative Change of +15.2% (2002 2016) -6.2% +0.5% 15 10 $20.3 $20.4 5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, on-leveled and developed to ultimate 26
Mississippi Average Medical Claim Severity Lost-Time Claim Severity in $ Thousands 35 30 Cumulative Change of +61.4% (2002 2016) +1.1% -1.7% 25 20 15 $32.1 $31.6 10 5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, on-leveled and developed to ultimate 27
Mississippi Filing Activity Voluntary Loss Cost and Assigned Risk Rate Changes -1.6% -3.2% -4.3% -5.7% -6.1% -6.0% -7.9% -7.9% -10.7% -10.9% 3/1/2015 3/1/2016 3/1/2017 3/1/2018 3/1/2019* Voluntary Assigned Risk *Pending 28
Mississippi March 1, 2019 Loss Cost Filing Overall Loss Cost Level Change: 10.7% Change in Experience: Change in Trend: Change in Benefits: Change in All Other: 8.0% 3.0% 0.2% 0.1% 29
Mississippi March 1, 2019 Filing Average Changes by Industry Group Overall Loss Cost Level Change: 10.7% -8.0% -12.0% -12.2% -11.7% -10.2% Manufacturing Contracting Office & Clerical Goods & Services Miscellaneous 30
Average Voluntary Pure Loss Costs Using Mississippi Payroll Distribution Pure Loss Cost All Classes 1.50 1.10 1.20 1.00 0.50 MS AL AR LA TN Region Country Based on approved rates and loss costs in various jurisdictions from filings using data valued as of 12/31/2016 31
Current NCCI Voluntary Market Loss Cost/Rate Level Changes Excludes Law-Only Filings Percent 10 5 Approved Pending 6.2 0-5 -10-15 -10.7-20 -19.0 TN CT CO NC AR AK NH TX FL WV ME KY MT MS OR IA SC GA IL UT NE AZ IN SD MD AL KS LA RI NM ID DC VT MO VA OK NV HI Reflects the most recent experience filing in each jurisdiction Due to the timing of the individual loss cost/rate filings, the figures shown may include changes from prior filing seasons 32
Current Voluntary Market Rates/Loss Costs Southeastern States Virginia* 4/1/2019-2.6% Louisiana* 5/1/2019-5.6% Alabama* 3/1/2019-6.4% Georgia South Carolina* Mississippi* Kentucky West Virginia Florida* Arkansas North Carolina* 3/1/2018 4/1/2019 3/1/2019 10/1/2018 11/1/2018 1/1/2019 7/1/2018 4/1/2019-8.7% -9.2% -10.7% -10.8% -13.0% -13.4% -15.4% -15.9% Tennessee* 3/1/2019-19.0% *Pending 33
Byron Carter Mississippi Kids Chance The Mississippi Bar 643 North State Street Jackson, MS 39202 Phone: 601-948-4471
Countrywide and Mississippi Labor Markets
National Economic Highlights and Their Impact on Workers Compensation National Economic Indicator Private employment growth continues to be near 2% Potential Impact on the Workers Compensation Market Continuing payroll and premium growth Wage growth is increasing and expected to accelerate Upward pressure on payroll and premium growth as well as indemnity severity Medical inflation is forecast to rise Short-term and long-term interest rates have increased Increases in medical costs per claim Investment yields will increase across the spectrum of bond maturities 36
Change in Private Employment Private Employment Growth Is Below Average Percent 6 Mississippi United States 4 2 0 +2.2 +2.1 +0.6 +1.8 +1.5 +1.8-2 2016 Q1 2017 Q1 2018 Q1 Year-over-year percentage change; employment is for Total Private Industry Frequency of observation: quarterly; 2015 Q1 2018 Q1 Sources: US Bureau of Labor Statistics, Moody s Analytics, and NCCI 37
Change in Average Weekly Wages Wage Growth Is Below the National Average Percent 6 Mississippi United States 4 2 0 +1.4 +1.2 +0.3 +1.6 +1.7 +3.2-2 2016 Q1 2017 Q1 2018 Q1 Year-over-year percentage change; wages are for Total Private Industry Frequency of observation: quarterly; 2015 Q1 2018 Q1 Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody s Analytics, and NCCI 38
Private Industry Payroll Growth Decomposition Payroll Growth Is Lower Than the National Average Percent 6 Mississippi United States +5.0 Payroll 4 +3.3 +3.2 AWW +1.7 2 0 +1.5 +1.8 Employment -2 AWW = Average Weekly Wage 2018 Q1 year-over-year percentage change Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody s Analytics, and NCCI 39
Change in Employment by Sector Employment Has Increased in Most Sectors in the Past Year Information Government Industrial Sector Professional Construction and business services Education Natural resources and health and services mining Leisure Education and and hospitality health services Financial Manufacturing activities Construction Professional and business services Manufacturing Financial activities Trade, Leisure transportation, and hospitality and utilities Other services Natural Trade, transportation, resources and mining and utilities Government Information Employment numbers are rounded to the nearest hundred Year-over-year percentage change; frequency of observation: quarterly; 2018 Q1 Sources: US Bureau of Labor Statistics, Moody s Analytics, and NCCI Year-Over-Year Percent Change, 2018 2017Q4 Q1Q4 Sector Size % Share 1-Year Change WV MS +14.0 +5.0 112,900 33,900 10 5 +4,200 +5,400 US +3.3 +2.5 WV MS +7.4 +2.2 145,900 21,700 12 3 +1,500 +3,200 US +5.4 +2.0 WV MS +0.7 +1.8 130,700 136,600 17 12 +2,300 +900 US +2.1 +2.0 WV MS +0.8 +2.9 47,000 45,300 64 +1,200 +300 US +1.5 +1.6 WV MS +0.5 +2.1 66,100 44,700 94 +300 +900 US +2.2 +3.5 WV MS +0.4 +0.6 144,700 26,900 12 4 +100 +900 US +1.8 WV MS 0.4 +0.3 232,400 73,900 10 20 300 +600 US +2.3 +0.9 WV MS 0.6 +0.4 56,200 41,800 74 300 +200 US +1.7 +1.6 WV MS 0.5 1.4 132,100 9,700 181 700 200 US +0.7 +6.6 WV MS 12.0 0.1 242,700 8,300 211 1,200 300 US 1.3 +0.0 WV MS 2.5 5.1 153,600 11,200 201 4,000 600 US +0.1 1.7 40
Mississippi s Payroll Growth Decomposition by Sector Employment Growth + AWW Growth Payroll Growth 10% 5% 0 +5% +10% Government Trade, transportation, and utilities Manufacturing Education and health services Professional and business services Leisure and hospitality Financial activities Construction Other services Natural resources and mining Information 10% 5% 0 +5% +10% 10% 5% 0 +5% +10% AWW = Average Weekly Wage 2018 Q1 year-over-year percentage change; sectors are in descending order by the volume of state payroll amounts Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody s Analytics, and NCCI 41
Headline Unemployment Rate Unemployment Rate Is Above the National Rate Percent 6 MS: 4.7 4 US: 4.0 2 0 2017 2018 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Headline Unemployment Rate, seasonally adjusted Frequency of observation: monthly; latest available data point: June 2018 Source: US Bureau of Labor Statistics (BLS), www.bls.gov 42
Mississippi s Labor Market Mississippi s unemployment rate is above the US rate Payroll increased in Mississippi from gains in both wages and employment Trade, Transportation and Utilities is the private sector with the largest payroll in the state Payroll grew fastest in the Financial Activities, Professional and Business Services, and Manufacturing sectors Employment growth is below the US rate Employment growth in the Professional and Business Services sector outperformed the national average Employment in Trade, Transportation, and Utilities and Manufacturing grew less than these sectors national averages 43
The Data Connection Video
Legislative Issues
Legislative Overview for 2018 As of September 30, 2018: NCCI has tracked approximately 844 state and federal workers compensation-related bills 474 of the bills are in NCCI states 94 bills have been enacted (includes all jurisdictions and federal) 46
2018 Workers Compensation Legislative Activity CA OR WA NV ID UT MT WY CO ND SD NE KS MN WI IA IL MO MI IN OH KY WV VT NY PA VA CT ME NJ DE MD DC NH MA RI AZ NM OK AR TN MS AL GA NC SC AK TX LA HI FL States Not in Session 0 10 Bills Introduced 11 20 Bills Introduced 21 30 Bills Introduced More Than 30 Bills Introduced 47
Top Five WC Legislative Trends in 2018 Number of Bills by Category Definition of Employee 67 Compliance 68 Reimbursement/Fee Schedules 91 Court/Legal Issues 97 First Responders 111 48
NCCI s Engagement at the Federal Level NCCI works with Congress and federal agencies to educate and inform federal public policymakers on the impact of legislative and regulatory issues on the state-based workers compensation system. 49
NCCI s Engagement at the Federal Level (cont d) NCCI provides information and insights to several federal agencies, including: US Department of Labor (USDOL) National Institute for Occupational Safety and Health (NIOSH) Government Accountability Office (GAO) US Department of the Treasury 50
Federal Insurance Office Report on TRIP Effectiveness Key findings: The Terrorism Risk Insurance Program (TRIP) is effective in making terrorism risk insurance available and affordable TRIP has not had the effect of discouraging or impeding property/casualty insurance TRIP serves as an important backstop for workers compensation insurance 51
Mississippi Legislative Activity 2018 Legislative Session MS SB 2311 Enacted; effective July 1, 2018 [Amends Mississippi Code Sections 83-11-1, 83-11-7, 83-5-28, 83-11-101, and 71-3-77] The bill impacted notices of nonrenewal when a replacement policy form is issued by the same insurer or when an insured is transferred to a licensed affiliate of the insurer, termed affiliate transfers. Affiliate transfer is defined, in part, as when an insurer transfers, at renewal or policy expiration, its personal or commercial lines insurance policies to an affiliated licensed insurer that is a member of the same insurance group or same holding company as the transferring insurer. The issuance of a replacement policy form... or the transfer of... policies to a licensed affiliate insurer... are considered a renewal and will not be treated as a cancellation or nonrenewal.... 52
Mississippi Legislative Activity 2018 Legislative Session MS SB 2311 Enacted; effective July 1, 2018 [Amends Mississippi Code Sections 83-11-1, 83-11-7, 83-5-28, 83-11-101, and 71-3-77] Section 71-3-77 addresses workers compensation and generally requires 30-day prior written notice of nonrenewal or cancellation to the Mississippi Workers Compensation Commission (WCC) and the insured. SB 2311 amended Section 71-3-77 and eliminated the notice requirement when a replacement policy form providing the same or substantially similar coverage is issued by the same insurer, or when a transfer of an insured to a licensed affiliate of the insurer providing the same or substantially similar coverage occurs. 53
Mississippi Legislative Activity 2018 Legislative Session MS SB 2311 Enacted; effective July 1, 2018 [Amends Mississippi Code Sections 83-11-1, 83-11-7, 83-5-28, 83-11-101, and 71-3-77] SB 2311 included the following notice requirements: 30-day prior written notice of any terms or conditions less favorable to the policyholder by the same insurer or by a licensed affiliate insurer for replacement policy forms 45-day prior notice to MS DOI and MS WCC of the transfer of policies by transferring insurer (notice must include name of transferring insurer, and name and financial rating of insurer receiving transferred policies) 30-day prior written notice (prior to policy term expiration) by transferring insurer to policyholder (notice must include financial rating of insurer receiving transferred policies) 54
Opioids and Workers Compensation
What Is a Prescription Opioid? Prescription opioids are a class of drugs used to treat moderate to severe pain, particularly chronic, intractable pain Prescription opioids include oxycodone (OxyContin ), hydrocodone (Vicodin ), and morphine Opioids bind to and activate opioid receptors on cells in the brain and body Pain signals are blocked, and large amounts of dopamine are released Misuse of opioids can slow down breathing, which can lead to death 56
Background According to the US Department of Health and Human Services (HHS), in 2016: 11.5 million Americans misused prescription opioids 2.1 million reported an opioid disorder 116 died every day from an opioid-related overdose According to the Centers for Disease Control and Prevention (CDC), in 2016: 40% of opioid overdose deaths involved a prescription opioid The number of overdose deaths involving prescription opioids was five times higher than in 1999 The US prescribing rate for opioids was 61 prescriptions per 100 persons 57
Impact on Workers Compensation According to NCCI s data, injured workers who were prescribed at least one prescription in 2016 received three times as many opioid prescriptions as the overall US opioid prescribing rate Workers compensation is directly impacted because injured workers are often prescribed opioids for pain 58
Opioids Are a Significant Share of WC Prescription Drug (Rx) Costs Two in five Rx claims received an opioid in Service Year (SY) 2016 Claims Costs The average cost of an opioid Rx claim is four times that of a nonopioid Rx claim One in four dollars spent for prescription drugs in workers compensation is for opioids Spend Source: NCCI s Medical Data Call, Service Year 2016; states included are AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, and WI 59
How Did We Get Here? Physicians interviewed by NCCI pointed to four key factors that led to the rise in opioid prescribing and consumption: 60
State Regulators Perspective State regulators interviewed by NCCI shared that tools in the fight against the opioid epidemic include: 61
Legislative and Regulatory Activity In 2018, a large majority of states considered prescription drug legislation or regulatory changes, including: Drug formularies Limitation on physician dispensing and repackaged drugs PDMPs Prescription drug fee schedules Federal: New Initiative to Stop Opioid Abuse and Reduce Drug Supply and Demand CDC Guidelines provide recommendations for prescribing opioid pain medication Legislation Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act 62
Claims Professionals Perspective Claims professionals interviewed by NCCI said that there are four key elements that are critical for successfully managing claims involving opioids: 63
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Find It on ncci.com/insights 65
Residual Market: Countrywide and Mississippi
NCCI s Residual Market Services As of January 2018, NCCI provides Plan Administration services in the following states: AK, AL, AR, AZ, CT, DC, GA, IA, ID, IL, KS, MS, NH, NM, NV, OR, SC, SD, TN, VA, VT, and WV Other Plan Services: DE, IN, and NC As of January 2018, NCCI provides Pool Administration services in the following states: National Pool: AK, AL, AR, AZ, CT, DC, DE, GA, IA, ID, IL, KS, NC, NH, NJ, NV, OR, SC, SD, TN, VA, VT, and WV New Mexico Pool Tennessee Reinsurance Mechanism Financial and Actuarial Services: MA and MI 67
Barrett Hathcock Manager, Compensation Insurance Services
Mississippi Total Residual Market Plan Estimated Premium Volume in $ Millions 25 20 19 15 16 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Policy Year Source: Compensation Insurance Services 69
Mississippi Residual Market Share Plan Premium As a Percentage of Direct Written Premium 7.3% 6.4% 6.1% 5.3% 4.8% 2013 2014 2015 2016 2017 Policy Year Source: Compensation Insurance Services 70
Mississippi Total Residual Market Plan Policy Counts 3000 2,661 2,592 2000 1000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Policy Year Source: Compensation Insurance Services 71
Mississippi Residual Market Number of Policies by Policy Size 2,500 2,000 1,500 1,000 500 0 0-5 5-10 10-25 25-50 50-up Policy Size in $ Thousands 2015 2016 2017 Source: Compensation Insurance Services 72
Mississippi Residual Market Total Written Premium in $ Millions by Policy Size 9 6 3 0 0-5 5-10 10-25 25-50 50-up Policy Size in $ Thousands 2015 2016 2017 Source: Compensation Insurance Services 73
Mississippi Residual Market Reinsurance Pool Net Operating Results Estimated Net Operating Gains and Losses As of the Quarter Ending 6/30/2018 Policy Year 2017 ($848) 2016 $1,086 2015 $4,103 2014 $2,138 -$2,000 -$1,000 $0 $1,000 $2,000 $3,000 $4,000 $5,000 Operating Gains and Losses in $ Thousands Source: Compensation Insurance Services 74
Residual Market Summary National Stable residual market share Manageable operating results Residual market premium declined slightly in 2017 High levels of customer service satisfaction Mississippi Decrease in premium volume Decrease in residual market share Self-funded operating results Please visit ncci.com for additional state and countrywide information. 75
Closing Remarks
Supplemental Information
Total Benefit Costs in Mississippi 38% 62% 36% 64% 42% 58% Indemnity Medical Regional states are AL, AR, LA, and TN Based on NCCI s financial data through 12/31/2017 78
Mississippi Indemnity and Medical Loss Ratios Indemnity Medical 0.81 0.52 0.59 0.38 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017 at current benefit level and developed to ultimate 79
Mississippi Claim Frequency Per Million of On-Leveled Premium 30.8 18.7 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, adjusted to a common wage level 80
Mississippi Average Indemnity Claim Severity Average Indemnity Claim Severity in $ Thousands Adjusted to Common Wage Level Actual 24.8 20.4 17.7 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017 for lost-time claims at current benefit level and developed to ultimate 81
Mississippi Average Medical Claim Severity Average Medical Claim Severity in $ Thousands Adjusted to Common Wage Level Actual 31.6 27.4 19.6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017 for lost-time claims at current benefit level and developed to ultimate 82
TX AR WV IN UT KS TN OR NV DC AZ MS SD NC KY AL VA NM NE CO MD OK HI NH MO ID FL LA ME IA GA SC MT RI IL AK VT CT CW Average Voluntary Pure Loss Costs Using Mississippi Payroll Distribution Pure Loss Costs All Classes 2.00 1.50 1.00 1.10 0.50 State Based on approved rates and loss costs in various jurisdictions from filings using data valued as of 12/31/2016 83
Mississippi Average Claim Frequency Frequency per 100,000 Workers All Claims MS 789 1,985 2,774 AL 3,020 AR 2,597 LA 2,205 TN 3,564 Reg 2,962 CW 3,076 Lost-Time Medical Only Based on NCCI s Statistical Plan data 84
Average Indemnity Claim Severity in the Region Lost-Time Claim Severity in $ Thousands 20.4 MS AL AR LA TN Based on NCCI s financial data 85
Average Medical Claim Severity in the Region Lost-Time Claim Severity in $ Thousands 31.6 MS AL AR LA TN Based on NCCI s financial data 86
Mississippi Distribution of Claims by Injury Type 72% 19% 9% 78% 15% 7% 75% 15% 10% Medical Only Temporary Total Permanent Partial Fatal & Permanent Total Regional states are AL, AR, LA, and TN Based on NCCI s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist 87
Mississippi Indemnity Loss Distribution by Injury Type 49% 47% 4% 42% 51% 3% 4% 33% 56% 5% 6% Temporary Total Permanent Partial Permanent Total Fatal Regional states are AL, AR, LA, and TN Based on NCCI s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist 88
Mississippi Medical Loss Distribution by Injury Type 47% 41% 12% 35% 45% 7% 12% 1% 30% 48% 8% 13% 1% Temporary Total Permanent Partial Permanent Total Medical Only Fatal Regional states are AL, AR, LA, and TN Based on NCCI s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist 89
Glossary
Glossary Assigned Risk Adjustment Program (ARAP) An assigned risk market program that surcharges residual market risks based on the magnitude of their experience rating modification. Calendar Year (CY) Experience of earned premium and loss transactions occurring within the calendar year beginning January 1, irrespective of the contractual dates of the policies to which the transactions relate and the dates of the accidents. Calendar-Accident Year (AY) The accumulation of loss data on all accidents with the date of occurrence falling within a given calendar year. The premium figure is the same as that used in calendar year experience. Claim Frequency The number of claims per unit of exposure; for example, the number of claims per million dollars of premium or per 100 workers. 91
Glossary Claim Severity The average cost of a claim. Severity is calculated by dividing total losses by the total number of claims. Combined Ratio The sum of the (1) loss ratio, (2) expense ratio, and (3) dividend ratio for a given time period. Detailed Claim Information (DCI) An NCCI Call that collects detailed information on an individual workers compensation lost-time claim basis, such as type of injury, whether or not an attorney was involved, and the timing of the claim s report to the carrier. Direct Written Premium (DWP) The gross premium income adjusted for additional or return premiums, but excluding any reinsurance premiums. 92
Glossary Indemnity Benefits Payments by an insurance company to cover an injured worker s time lost from work. These benefits are also referred to as wage replacement benefits. Loss Ratio The ratio of losses to premium for a given time period. Lost-Time (LT) Claims Claims resulting in indemnity benefits (and usually medical benefits) being paid to or on behalf of the injured worker for time lost from work. Medical-Only Claims Claims resulting in only medical benefits being paid on behalf of an injured worker. Net Written Premium (NWP) The gross premium income adjusted for additional or return premiums and including any additions for reinsurance assumed and any deductions for reinsurance ceded. 93
Glossary Permanent Partial (PP) A disability that is permanent but does not involve a total inability to work. The specific definition and associated workers compensation benefits are defined by statute and vary by jurisdiction. Policy Year (PY) The year of the effective date of the policy. Policy year financial results summarize experience for all policies with effective dates in a given calendar year period. Schedule Rating A debit and credit plan that recognizes variations in the hazard-causing features of an individual risk. Take-Out Credit Program An assigned risk program that encourages carriers to write current residual market risks in the competitive voluntary marketplace. Temporary Total (TT) A disability that totally disables a worker for a temporary period of time. 94
Appendix
NCCI s Workers Compensation Resources Financial Aggregate Calls Used for aggregate ratemaking Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan) Used for class ratemaking Detailed Claim Information In-depth sample of lost-time claims Policy Data Policy declaration page information 96
Financial Aggregate Calls Collected Annually Policy and calendar-accident year basis Statewide and assigned risk data Premiums, Losses, and Claim Counts Evaluated as of December 31 Purpose Basis for overall aggregate rate indication Research 97
Policy Year Financial Aggregate Data Policy Expiration Date Policy Year 2015 Policy Year 2016 Policy Year 2019 1/1/2015 1/1/2016 12/31/2016 1/1/2019 12/31/2019 Policy Effective Date 98
Calendar-Accident Year Financial Aggregate Data Policy Expiration Date Calendar- Accident Year 2016 Calendar- Accident Year 2017 Calendar- Accident Year 2020 1/1/2016 1/1/2017 12/31/2017 1/1/2020 12/31/2020 Policy Effective Date 99
Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan) Data Experience by Policy Detail Exposure, premium, and experience rating modifications Individual claims by injury type Purposes Classification relativities Experience Rating Plan Research 100
Valuation of Statistical Plan Data 1st Report Valuation 2nd Report Valuation 3rd Report Valuation 4th Report Valuation 5th Report Valuation Policy Effective 18 Months 30 Months 42 Months 54 Months 66 Months 101