The South Carolina Department of Insurance disapproved a request made by the National Council on Compensation Insurance to increase loss costs statewide by 23.7 percent.
NCCI State Relations Executive, Amy Quinn, said SCDOI released its announcement in August prompting NCCI on Sept. 14, to request a contested case hearing before the Administrative Law Court.
Quinn said the 23.7 percent request is based on an increase in actual cost of claims or “loss costs.” She said the NCCI figure is a starting point for carriers, who will consider additional overhead and commissions to calculate a “loss cost multiplier.”
The letter signed by SCDOI Program Manager Carla Griffin stated, “The requested increase is excessive and therefore violates the provisions of Chapter 73 of Title 38. Accordingly, this filing shall not become effective and has been stamped “Disapproved.””
As the designated rating entity for the state, NCCI is the only official data-collecting organization that compiles statistics for carriers statewide, Quinn said. All carriers in the state are affiliated with NCCI and they report their data to us, she added. “The department reviews our filings and has the authority to either accept or reject our request.”
Quinn said typically the state Consumer Advocate contests our requests, and the eventual change to loss cost is either determined by the state Administrative Law Court or an agreement between the affected parties.
“Rate adjustments in South Carolina are often delayed due to the state’s legal process,” Quinn said. “It is disruptive to the market not to get loss costs approved by the filing date. It’s not good when you’re looking for rate stability.”
Consumer Advocate for the South Carolina Department of Consumer Affairs, Elliot Elam, said his office will file papers with the court requesting intervention in the process of NCCI’s request to contest the disapproval.
Elam said workers compensation is a “real political football” in South Carolina. He said in 2005 when NCCI requested an increase of 32.9 percent, the resulting hearing spilled over into late 2006. “We’re committed to try to work something out with them (NCCI),” Elam added.
For NCCI, the South Carolina issue further complicates an already complicated practice, according to Quinn. She said a lot of sound actuarial judgment goes into the formula that assesses “trend and experience,” among other factors.
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