PCRB Proposes 5.99% Average Workers’ Comp Loss Cost Decrease in Penn.

December 19, 2014

The Pennsylvania Compensation Rating Bureau (PCRB) has submitted a filing of Pennsylvania loss costs and related rating values with a proposed effective date of April 1, 2015.

PCRB said in its Circular No. 1636 on Dec. 15 that its filing, No. C-365, proposes an overall average loss cost decrease of 5.99 percent.

PCRB’s filing also proposes the currently-approved Employer Assessment Factor value be revised down from 1.95 percent to 1.64 percent effective April 1, 2015, including effects of ongoing assessments made for the Uninsured Employers Guaranty Fund.

Describing key parameters underlying the proposed loss cost revision, PCRB said that based on a seven-year (Policy Years 2006-2012) fit using an exponential curve, PCRB’s estimate of claim frequency trend is a reduction of 5.0 percent annually.

For both indemnity and medical losses, severity trend is based on seven-year (Policy Years 2006-2012) exponential fits of severity ratios. PCRB’s estimates of annual claim severity trends are +2.2 percent for indemnity and +4.3 percent for medical.

In its filing, PCRB also commented on state legislation H.B. 1846, which was signed into law on Oct. 27 and will go into effect on Dec. 26. This legislation pertains to prescription drugs and pharmaceutical services in the state. (Its provisions include capping the reimbursement for prescription drugs and professional pharmaceutical services to 110 percent of the average wholesale price of the product.)

PCRB has estimated that H.B. 1846 will reduce medical costs for workers’ comp insurance in Pennsylvania by approximately 1.16 percent for the policies effective from April 1, 2015 through March 31, 2016. This medical savings lowered the indicated change in overall loss costs by 0.60 points (changing the overall indicated reduction in collectible loss costs from 5.39 percent to 5.99 percent).

Separately, the Coal Mine Compensation Rating Bureau of Pennsylvania (CMCRB) recently filed its loss cost level change for coal mines. The proposal, filed on Nov. 26, requests the approval of an overall 7.1 percent increase in loss costs, with a proposed effective date of April 1, 2015. (There are two workers’ comp rating organizations licensed in Pennsylvania: CMCRB and PCRB. CMCRB has jurisdiction over coal mine employers and operations, while PCRB has jurisdiction over all other employments.)

CMCRB’s filing also includes a proposal to revise down the Employer Assessment Factor applicable to classifications under CMCRB’s jurisdiction from 1.96 percent to 1.65 percent.

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