New Jersey’s Overall Workers’ Comp Rates to Remain Unchanged in 2016

By | November 16, 2015

New Jersey’s Compensation Rating and Inspection Bureau said the state’s commissioner of Banking and Insurance has approved a filing providing for no change in the overall level of workers’ compensation and employers liability rates and rating values currently in effect.

The filing is effective Jan. 1, 2016, on a new and renewal basis, the Compensation Rating and Inspection Burea said in its Nov. 13 circular letter.

While the overall premium level remains the same as last year, most individual classification rates will change based on the latest data. The bureau provided the following summary for rating components:

Experience and Trend

Analysis of data for the latest two complete policy years and the latest calendar-accident year, following adjustment to present premium and benefit levels, using paid and incurred losses separately, indicates a premium level adjustment factor of 0.949 (-5.1 percent) due to experience. A trend factor of 1.048 (+4.8 percent) is included to recognize changing exposures and losses.

Benefit Changes

Effective Jan. 1, 2016, the maximum weekly benefit for all types of injuries, except permanent partial disabilities, will be changed from $855 to $871. The minimum weekly benefit will be changed from $228 to $232.

In cases involving permanent partial disabilities, the present maximum weekly benefits ranging from $228 to $855 — varying on the basis of duration of disability — will be changed to $232 and $871, respectively. The minimum weekly benefit for permanent partial injuries will remain at $35. The effect of the changes to the minimum and maximum weekly benefits results in a premium level adjustment factor of 1.006 (+0.6 percent) due to benefits.

Expenses

There is need for a change in the provisions for loss adjustment expense, general expense and the security fund, the announcement said. The changes to the expense provisions result in a premium level adjustment factor of 0.999 (-0.1 percent).

Overall Rate and Rating Value Change

The combined effect of the above premium level adjustment factors results in no change (0.0 percent) to the overall level of rates and rating values.

Plan Premium Adjustment Program

The surcharge applicable to policies administered by the New Jersey Workers Compensation Insurance Plan is increased from a minimum of 17 percent to a minimum of 20 percent. The maximum adjustment factors for rated risks subject to the PPAP formula have also been revised. Changes to PPAP surcharges are not intended to increase the overall collectible premium. The premium level will be adjusted by a factor of 0.998 (-0.2 percent) in the determination of individual class rates.

Catastrophe Provisions

A terrorism premium charge of $0.03 per unit of exposure applies to all policies except for the exclusions in 3:9-2 and 3:9-5 of the manual. Upward deviation from the $0.03 rate is permissible as provided in 3:9-7.

A catastrophe (other than certified acts of terrorism) premium charge of $0.01 per unit of exposure applies to all policies, except for the exclusions in 3:9-9 and 3:9-12 of the manual.

Classification Rates

The adjustment of classification rate relativity is based on the policy experience for 2008
through 2012, as reported through the statistical plan.

There are 565 classifications in the manual effective Jan. 1, 2016, including the codes to
accommodate federal employments. Eight classifications carry no rate assignment. Of the remainder, 285 will experience increased rates, the rates for 259 classes will decrease, and 13 are unchanged. There are no changes to the annual policy charges for private estate or residence employees as set forth in 3:5-12 of the manual.

In order to comply with the decision of the commissioner of Banking and Insurance, the manual rate for any classification is limited to a 12.5 percent increase from the current rate.

The increase percentage applicable to non “F” classifications when coverage is provided
under the United States Longshore and Harbor Workers Compensation Act remains unchanged at 50 percent.

Surcharges

New Jersey law mandates application of separate policyholder surcharges to finance the Second Injury Fund and Uninsured Employers’ Fund. Based on the Department of Labor and Workforce Development’s estimate of 2016 Fund requirements, the policyholder surcharge percentages effective Jan. 1, 2016, on a new and renewal basis to be applied to the modified premium are: 5.81 percent for the Second Injury Fund and 0.00 percent for the Uninsured Employers’ Fund.