W o r k e r s C o m p e n s a t i o n I n s u r a n c e R a t i n g B u r e a u o f C a l i f o r n i a WCIRB Talks Proposed 2017 Rating Values and the 2017 Experience ification Estimator The webinar will begin shortly. Notice The information provided in this Presentation was developed by the Workers Compensation Insurance Rating Bureau of California (WCIRB) solely for the purpose of discussion during this Presentation. The WCIRB shall not be liable for any damages, of any kind, whether direct, indirect, incidental, punitive or consequential, arising from the use, inability to use, or reliance upon information provided in this Presentation. 2016 Workers Compensation Insurance Rating Bureau of California. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, without limitation, photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Workers Compensation Insurance Rating Bureau of California (WCIRB), unless such copying is expressly permitted by federal copyright law. No copyright is claimed in the text of statutes and regulations quoted within this work. Workers Compensation Insurance Rating Bureau of California, WCIRB, WCIRB California, WCIRB Connect, WCIRB Inquiry, X- Direct, escad and the WCIRB California logo (WCIRB Marks) are registered trademarks or service marks of the WCIRB. WCIRB Marks may not be displayed or used in any manner without the WCIRB s prior written permission. Any permitted copying of this work must maintain any and all trademarks and/or service marks on all copies. To seek permission to use any of the WCIRB Marks or any copyrighted material, please contact the WCIRB at customerservice@wcirb.com. Webinar Presenters Dave Bellusci EVP & Chief Actuary Ward Brooks Vice President, Research 2 1
Webinar Agenda WCIRB Talks is a series of 30-minute webinar discussions on the 2017 changes to experience rating. Today s session includes: The WCIRB s January 1, 2017 Regulatory Filing Demo of the 2017 Experience ification Estimator Question and answer session 3 2017 Changes to Experience Rating What to Expect this Year Feb 25 Talks #1 April 7 Talks #2 May 26 Talks #3 June Proposed 2017 rating values X- Calculator July 28 Talks #4 September Earliest issuance of January 2017 mods Sep 29 Talks #5 Nov 17 Talks #6 5 2
2017 Change to a Variable Split X- Formula In 2017, the split point will vary based on the size of an employer as measured by three year expected losses Small employers will have smaller split points as low as $4,500 Large employers will have larger split points as large as $75,000 Why vary the split point? The one size fits all fixed split approach was determined to be less predictive and a source of X- volatility for small employers Varying the split point by size of employer Reduces volatility arising from each large claim Significantly increases actuarial accuracy of the plan Allows for future plan simplification 6 Distribution of Expected X- Changes from Transitioning from Current Plan to Variable Split Plan 30% Current $7,000 Split to Variable Split 25% Percent of Employers 20% 15% 10% 5% 0% < -14-13 -12-11 -10-9 -8-7 -6-5 -4-3 -2-1 0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11 +12 +13 +14 > Percentage Change in ification 7 3
Regulatory Filing Process Update Insurance Commissioner Approved Variable Split Plan to be Effective in 2017 in September of 2015 WCIRB Regulatory Filing Containing Proposed 2017 Variable Split Plan Rating Values Filed on June 28, 2016 CDI Notice of Proposed Action and Notice of Public Comment Issued July 15, 2016 45 day notice period through August 29, 2016 Following CDI Decision, WCIRB will begin issuing 2017 X-s 8 What s Included in the Regulatory Filing? Proposed 2017 Rating Values Section C Primary thresholds $4,500 to $75,000 Table II D-Ratios For each primary threshold and Table I each classification Expected loss rates For each classification Table I Eligibility threshold $10,100 Appendix A Credibility primary 1.00 for all employers Table II Credibility excess 0.00 for all employers Table II 9 4
2017 Experience ification Estimator Simple to use Excel-based application Estimates the impact of change to variable split formula in 2017 Estimator focused on impact of the change to a variable split and doesn t always reflect all possible variations in the data Uses WCIRB proposed rating values Will be updated with approved rating values following CDI decision Requires entry of payroll by classification and claim values Estimates potential 2017 X- under both variable split formula & and pre-2017 fixed split formula Estimator for 2016 X-s also available 10 Register for the Next Webinar WCIRB Talks January 2017 Experience ifications Thursday, September 29 at 10am PDT The Insurance Commissioner s decision on the Regulatory Filing Initial issuance of January 2017 experience modifications The 2017 Experience Rating Worksheet Register at www.wcirb.com/content/wcirb-webinars 12 5