The National Council on Compensation Insurance (NCCI ) recently delivered a workers’ compensation loss cost filing to the Virginia State Corporation Commission (SCC).
Based on its review of the most recently available data, NCCI proposed in its July 17 filing an overall average workers’ comp voluntary market loss cost level change of +3.4 percent to become effective April 1, 2016. (Average changes by industry group are: +2.1 percent for manufacturing; +4.2 percent for contracting; +2.8 percent for office and clerical; +3.8 percent for goods and services; and +3.1 percent for miscellaneous.) In addition, NCCI proposed an overall average assigned risk rate level change of +2.3 percent, also to become effective April 1, 2016.
NCCI said the Virginia filing represents NCCI’s highest loss-cost increase recommendation so far this year. SCC has scheduled a hearing for this case for Oct. 6, to be held at an SCC courtroom in downtown Richmond, Virginia.
The +3.4 percent overall average voluntary loss cost level change proposal includes following components: +3.3 percent change in experience, trend and benefit change; and +0.1 percent for loss adjustment expense change. The +2.3 percent overall average assigned risk rate level change proposal includes following components: +3.3 percent change in experience, trend and benefit change; +0.1 percent for change in the assigned risk loss cost differential; -1.2 percent for change in assigned risk expenses; +0.6 percent for change in the profit and contingencies provision; and -0.5 percent for change in the uncollectible premium provision.
NCCI provided the following key observations in its loss cost filing:
- The filing is based on premium and loss experience for policy years 2012 and 2013. Experience for policy year 2012 is comparatively more favorable than that for policy year 2013;
- Virginia’s claim frequency has generally declined since the middle 2000s;
- After adjusting to a common wage level, indemnity average cost per case figures remain relatively flat in Virginia, while the upward trend in the medical average cost per case figures continues; and
- Compared with the proposed change in the voluntary market, the lower overall average assigned risk rate level change is primarily driven by decreases to several expense provisions. Reductions in assigned risk market expenses (including administration expenses) and the uncollectible premium provision more than offset the proposed increase in the indicated profit and contingencies provision.
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