unit statistical data— premium rating programs and exposures · 01 5474 $50,000 1.53 $765 1.000...

NCCI’s 2018 Data Educational ProgramJanuary 30–February 2, 2018

Palm Beach County Convention CenterWest Palm Beach, FL

The Path to Data Excellence

Unit Statistical Data—Premium Rating

Programs and Exposures

1

© Copyright 2018 National Council on Compensation Insurance, Inc. All Rights Reserved.

Unit Statistical Data—Premium Rating Programs and

Exposures

Presented by:Richard Saltzman and Stephan Cartright


NCCI’s 2018 Data Educational Program2

Trivia

Question Answer

The state with the largest population

Most populated city in the world

Most populated city in Florida

Most populated country in the world

Least populated country in the world

Possible AnswersJacksonvilleChina CaliforniaVatican CityTokyo

2


NCCI’s 2018 Data Educational Program

Objective

To become familiar with Unit Statistical premium rating programs and exposures topics.

3



Agenda

4

Exposure Reporting

Split Periods

Individual Risk Rating Plans

Additional Premium Components

Audit Noncompliance

Other Exposure Topics

3



Exposure Basis

5

Payroll

Salaries, Wages, Bonuses, etc.

Nonpayroll

Per Capita



Exposure Reporting—Single‐State Policy

6

Policy Issuance:

— State Issued WithEstimated Exposure

— State issued on “If Any” Basis

State Issued With Estimated Exposure


Audit Results:

State Developed Exposure at Audit

State Did Not Develop Exposure at

Audit

State Has Not Yet Been Audited

Unit Reporting:

Report Applicable Data

Report Statistical Code 1111

Report Applicable Data With Estimated

Exposure

Report the Expense Constant and Minimum Premium covered on the policy

4



Florida policy with estimated exposure forClass Code 6834

No exposure developed at audit

7

Example: No Exposure Developed—Single State

Exposure Act Class Exposure

Manual Rate Premium Mod

ModEffective Date

Rate Effective Date

00 1111 0 0 0 0.000 1/1/15 1/1/15

00 0900 0 0 200 0.000 1/1/15 1/1/15

00 0990 0 0 21 0.000 1/1/15 1/1/15



Exposure Reporting—Multistate Policy

8

Policy Issuance:

‐‐ State Issued WithEstimated Exposure

‐ State on “If‐Any”Basis

‐ State Not Originallyon Policy



Audit Results:

State Developed Exposure at Audit

State Did Not Develop Exposure at

Audit

State Has Not Yet Been Audited

Unit Reporting:

Report Applicable Data

Report Statistical Code 1111

Report Applicable Data With Estimated

Exposure

Report the highest Expense Constant of all states covered on the policy

Report the highest Minimum Premium of all states covered on the policy

5



No Exposure Developed—Multistate Policy

9

State Did Not Develop

Exposure at Audit

Do Not Report

State issued on “If Any” Basis

Does not have the Highest Expense

Constant

Does not have the Highest Minimum

Premium

and

and

Policy Issuance Unit ReportingAudit Results



Per Capita—Domestic Workers

10

Domestic Workers—Residences—Full‐Time

Domestic Workers—Residences—Part‐Time

Workers—More than 20 hours per week

Workers—20 hours or less per week

Class Code 0913 Class Code 0908

Number of Workers Duration of Coverage

6



Per‐Capita Codes (Part‐Time Workers)

11

Duration of CoverageCharged Exposure

Amount

1 day to 1 month and 23 days 1

1 month and 24 days to less than 3 months 2

3 months to 4 months and 5 days 3

4 months and 6 days to 5 months and 11 days 4



7 months and 24 days to less than 9 months 7



11 months and 12 days to 1 year and 17 days 10

1 year and 18 days to 1 year, 1 month, and 23 days 11

Unit Statistical Reporting Guidebook (USRG): Part 4‐H‐3



Example: Per‐Capita Codes

12

What is the correct reported exposure for both workers?

A. 1.2B. 20C. 8

Joseph works for 6 months

Duration of CoverageExposure Amount


Total Combined Duration of Coverage = 10 Months

Theresa works for 4 months

Classification Code0908

7



Ratable/Nonratable Exposure

Class codes designated with an “N” have corresponding statistical codes (nonratable element)

Adjusts for the classification’s potential for occupational disease/catastrophic losses

Nonratable element is a supplementary loading in the manual rate for a classification

Premium for a nonratable element is not subject to experience rating or retrospective rating

13



Nonratable Elements

Statistical Codes for Nonratable Portion of Class Code Rate

Nonratable Exposure = Ratable Exposure Report Exposure, Rate, and Premium

14

Class ExposureManual Rate Premium Mod

ModEffective Date

Rate Effective Date

4771 $50,000 3.86 $1,930 1.000 1/1/15 1/1/15

0771 $50,000 0.68 $340 0.000 1/1/15 1/1/15

8



Supplemental Disease Exposures

Incidental foundry, asbestos, abrasive sandblasting, atomic energy radiation, and silicosis

Supplemental disease loading may be added

Not subject to experience rating or retrospective rating

Report exposure, rate, premium, and loss

Statistical codes for supplemental disease

15

Statistical Plan—Part 3‐F‐2‐c



Supplemental Disease Exposure Example

Insured’s classification is Painting Operations Employees were exposed to sandblasting operations

16

What is the exposure for Supplemental Disease Code 0059?

a. $50,000b. $0c. $40,000

Exposure Act Class Exposure

Manual Rate Premium Mod

ModEffective Date

Rate Effective Date

01 5474 $50,000 1.53 $765 1.000 1/1/14 1/1/14

01 0059 0.000 1/1/14 1/1/14$50,000 $2650.53

9



Agenda

17

Exposure Reporting

Split Periods



Audit Noncompliance




A split period occurs when multiple rates or experience modification factors are applicable to a policy period.

18

What Is a Split Period?

10



Reasons for Reporting Split Periods

19

Law‐only filings

Application of late experience modification factor

Carrier adoption of class codes and rates are different from NCCI’s rate filing effective dates



Reporting Split Periods

20

Split Period Indicators (0–9)

Class Codes—Prorated exposure and premium

Statistical Codes—Prorated premium

11



Rate Effective Date

21

Effective date of the manual/charged rate corresponding to class code, exposure, and premium

Generally equals the Policy Effective Date

Corresponds to the effective date of the class code valid per state



Experience Modification Effective Date

22

The date the experience modification factor became effective

Equals the Rating Effective Date on the Experience Modification Worksheet

Corresponds to the experience modification factor and its associated class code, exposure, and premium

12



Example: Policy Effective Date Is Different From Experience Modification Effective Date

23

10/15/18

1) Original policy writtenExperience Rating Date

is 10/15/17

10/15/17




24

PED

01/16/18 10/15/18 01/16/19


is 10/15/17

2) Policy cancelled and rewritten

01/16/18–01/16/19

10/15/17

13




25

PED

01/16/18 10/15/18 01/16/19


is 10/15/17

2) Policy cancelled and rewritten

01/16/18–01/16/19

Split Period 1: Experience Modification Effective Date 10/15/17

Mod 1.00

Split Period 2: Experience Modification Effective Date 10/15/18

Mod 0.95

10/15/17



Example (cont’d)

26

ClassCode Exposure Rate Premium

Exp Mod

Exp ModEff. Date

Rate Eff. Date

SplitInd.

8810 20,000 0.25 50 1.000 10/15/17 1/16/18 0

8810 10,000 0.25 25 0.950 10/15/18 1/16/18 1

Pol Nbr: Mod Eff Date

Report Nbr: 1

Cov Provider ID: 99990

Corr Seq Nbr: 0

Pol Eff Dt: 1/16/2018State: 01‐AL

14



Review Time

27

Questions

Statistical Code for No Exposure Developed

What Includes Salary, Wages, and Bonuses?

A Reason for Split Periods

Per‐Capita Domestic Worker Exposure Basis

Effective Date of Rate Charged for Class Code

Exposure Reported When Policy Is Not Audited

What Identifies Individual Split Periods?

Possible Answers

Late Adoption of Rate Filing

Nonpayroll Exposure

1111

Single State Policy

Payroll Exposure

1112

Split Period Indicators

Audited

Rate Effective Date

Duration of Coverage

Estimated Exposure

Per Capita



Agenda

28

Exposure Reporting

Split Periods



Audit Noncompliance


15



Individual risk rating plans allow for Credit and Debit Adjustments (– and +) to premium

Statistical codes are established for reporting on unit statistical 1st reports

Premium adjustments may apply:

Subject to experience rating

Not subject to experience rating

Not part of standard premium

29




NCCI‐Filed Premium Programs

30

StatisticalCode Premium Program Adjustment Placement

9841 Drug‐Free Workplace Premium CreditSubject to

Experience Rating

9843 Managed Care Premium CreditSubject to

Experience Rating

9880 Workplace Safety Premium CreditNot Subject to

Experience Rating

9851Small New Employer

CreditPremium Credit

Not Subject to Experience Rating

16



Carrier Independent ProgramsOther Than Deductible and Schedule Rating

31

Statistical Code Premium Program Adjustment Placement

9721Independent Carrier

FilingPremium Credit

Subject toExperience Rating






Not Part ofStandard Premium


FilingPremium Debit

Subject toExperience Rating


FilingPremium Debit



FilingPremium Debit

Not Part ofStandard Premium



Deductible and Schedule Rating

32

Stat Code

Premium Program

Premium Adjustment Placement

NCCI Program

Carrier Program

9663 Deductible CreditNot Subject to

Experience RatingYes Yes

9664 Deductible CreditSubject to


9657 Deductible CreditNot Part of

Standard PremiumYes Yes

9887Schedule Rating

CreditNot Subject to


9889Schedule Rating

DebitNot Subject to


9750WV only

Schedule Rating

CreditNot Part of

Standard PremiumNo Yes

9751WV only

Schedule Rating

DebitNot Part of

Standard PremiumNo Yes

17



Deductibles

33

NCCI‐Filed Small Deductibles

Independently Filed Small Deductibles

Independently Filed Large Deductibles



Deductible Statistical Codes

34

Stat Code

Premium Program

Premium Adjustment Placement

NCCI Program

Carrier Program

9663 Deductible CreditNot Subject to


9664 Deductible CreditSubject to


9657 OK only

Deductible CreditNot Part of

Standard PremiumYes Yes

18



Deductible Resources

Statistical Plan—Provides rules for reporting deductible programs and Deductible Reimbursement

USRG—Part 8 is dedicated to reporting deductible programs

35

Small Deductible State Guide(USRG—Part 8‐D)

StateEffective Date

Deductible Type

Type of Plan

Deductible Amount

Stat Code

Net or

GrossDeductible

Reimbursement

FL 7/1/95Medical and

Indemnity

Per Claim

$ 5,000 10,000 15,000 20,000 25,000 50,00075,000

9664 Gross Report “0”



Include NCCI‐filed and carrier independently filed programs

NCCI files small deductible programs with state insurance departments

NCCI small deductible programs may provide:

36

Small Deductible Programs

Premium Credit Policy Credit

Deductible Reimbursement Reduced Losses for Experience Rating

19



NCCI does not file large deductible programs

Generally include deductibles of $100,000 and greater, but vary by state

State exceptions for small and large deductible programs can be found in Unit Statistical Reporting Guidebook Part 8‐D

37

Carrier Independently FiledLarge Deductibles



Premium Algorithm

38

Before Subject Premium

Independent Carrier Filings—9721 (–) and 9723 (+)

Drug‐Free Workplace—9841 (–)

Workplace Safety—9965 (–)

Increased Limits ($100,000/100,000/1,000,000)—9803 (+)

Total Subject Premium

Experience Modification Factor

Total Modified Premium

Independent Carrier Filings—9722 (–) and 9724 (+)

Loss Constant—0032 (+)

Merit Rating—9886 (+)

Total Standard Premium

Independent Carrier Filings—9655 (–) and 9656 (+)Expense Constant—0900 (+)Catastrophic Provisions for Terrorism—9740 (+)

20



Agenda

39

Exposure Reporting

Split Periods



Audit Noncompliance




Limits of liability apply to employers liability (EL) insurance

With or without workers compensation insurance

Voluntary workers compensation insurance

USL&HW Act

Admiralty Law or FELA

Limits of liability components

Bodily Injury by Accident (each accident)

Bodily Injury by Disease (each employee)

Bodily Injury by Disease (policy limit)

Statistical codes used to report the additional premium for increased limits of liability

40

Increased Limits of Liability

21



Increased Limits for WC and EL $500,000/$500,000/$500,000

Statistical Plan Rules Report any additional premium for increased limits of

liability to the appropriate statistical code

41

Example 1: Increased Limits

Increased Limit Statistical Codes—WC and EL

Statistical Codes Increased Limits

9805 $100,000/$100,000/$5,000,000

9806 $100,000/$100,000/$10,000,000

9807 $500,000/$500,000/$500,000

9808 $500,000/$500,000/$1,000,000

9809 $500,000/$500,000/$2,500,000



Workers Compensation and Employers Liability

All limits are less than $1 Mil/1 Mil/10 Mil

Stat Code 9837—All Other Limits of Liability

Any limits are greater than $1 Mil/1 Mil/10 Mil

Stat Code 9816—Over $1,000,000/1,000,000/10,000,000

42


What if an employer chooses increased limits that don’t match one of the statistical codes in the Statistical Plan?

22



Employers Liability Only

All limits are less than $1 Mil/1 Mil/10 Mil

Statistical Code 9837—All Other Limits of Liability

Any limits are greater than $1 Mil/1 Mil/10 Mil

Statistical Code 9836—Without Workers Compensation Coverage Over $1,000,000/1,000,000/10,000,000

Admiralty or FELA

When the accident limit is over $500,000

Statistical Code 9840—Admiralty or FELA Risks Over $500,000

43




Increased Limits for WC and EL $1,000,000/$1,000,000/$7,500,000

Statistical Plan Rules All limits are less than $1 Mil/1 Mil/10 Mil

Stat Code 9837—All Other Limits of Liability

Any limits are greater than $1 Mil/1 Mil/10 Mil Stat Code 9816—Over

$1,000,000/1,000,000/10,000,000

44

Example 2: Increased Limits

Increased Limit Statistical Codes—WC and EL

Statistical Codes Increased Limits

9814 $1,000,000/$1,000,000/$5,000,000

9815 $1,000,000/$1,000,000/$10,000,000

9816 Over $1,000,000/$1,000,000/$10,000,000

9837 All Other Limits of Liability

23



Terrorism Premium

In 2002, the Terrorism Risk Insurance Act of 2002 was implemented

In 2015, Congress enacted TRIPRA of 2015, which extends through December 31, 2020

TRIPRA premium is reported under Statistical Code 9740—Catastrophe Provisions for Terrorism Rating

Circular DR‐2015‐02

45



Terrorism Reporting

46

Terrorism Reporting Options

Data ElementsWCSTAT

9740 Premium Exposure Rate

Yes Yes Yes Yes Exposure Record (WCSTAT Record Type 4)

Yes Yes No NoExposure Record (WCSTAT Record Type 4)Zero‐Fill Data Elements Not Reported

24



Carrier Rate Deviations

47

Carrier filing 10% debit (+) to FL Class Code 5551 rate (20.01)

Class/Stat Codes Exposure Rate Premium

Method #1

5551 360,000 22.01 79,236

Method #2

5551 360000 20.01 72,032

9039

Rate Deviation Premium (+)Subject to

Experience Rating

7,204



Agenda

48

Exposure Reporting

Split Periods



Audit Noncompliance


25



State rules for employers that do not allow final audit

Audit Noncompliance Charge

Statistical Code 9757 (Not Part of Standard Premium)

Estimated Audit Code—Yes (Y)

Correction Report required when audit is completed

Update Exposure Amount and Premium

Remove Statistical Code 9757

Update Estimated Audit Code—No (N)

49

Audit Noncompliance RulePrior to 1/1/2017



National rules for employers that do not allow the final audit

Audit Noncompliance Charge (ANC)

Based on state rules (2X, 3X, etc.)

Statistical Code 9757 (Not Part of Standard Premium)

Estimated Audit Code—No (N)

Correction Report required when audit is completed

Update Exposure Amount and Associated Premium

Remove Statistical Code 9757

Estimated Audit Code remains—No (N)

50

Audit Noncompliance Rule Effective 1/1/2017

26



Example: Audit NoncomplianceEffective 1/1/2017

51

UpdateClass/StatCode Exposure Rate Premium

A 8810 10,000 0.20 20

A 8742 20,000 0.40 80

A 9757 200

Pol Nbr: WC99999

Report Nbr: 1


Corr Seq Nbr: 0

Pol Eff Dt: 1/1/2017

State: 05‐CO Est. Exp.: N

1st Report Estimated Exposure



Example: Audit NoncomplianceEffective 1/1/2017

52

UpdateClass/StatCode Exposure Rate Premium

C 8810 12,258 0.20 25

C 8742 26,852 0.40 107

D 9757 200

Pol Nbr: WC99999

Report Nbr: 1


Corr Seq Nbr: 1

Pol Eff Dt: 1/1/2017

State: 05‐CO Est. Exp.: N

Correction Report Final Audit Completed

27



Audit Noncompliance Resources

Statistical Plan Part 3‐F‐3—Final or Earned Premium

Rule State Exceptions (AK, IN, and TX)

Unit Statistical Reporting Guidebook Part 6—Reporting Topics, Item H

(Audit Noncompliance Charge)

Circular FYI‐DR‐2016‐06

53



Agenda

54

Exposure Reporting

Split Periods



Audit Noncompliance


28



Taxes and Assessments—Not Premium

55

Florida Taxes and Assessments

Premium Tax

Workers Compensation Administration Trust Fund

Special Disability (Second Injury) Fund

Insurance Guarantee Association Act—Workers Compensation Account

Georgia Taxes and Assessments

Premium Tax

Workers Compensation State Board Tax

County and Municipal Premium Tax

Insurers Insolvency Pool—Workers Compensation Account

Special Fraud Fund Assessment

Refer to NCCI’s Tax and Assessment Directory



Example: Taxes and Assessments

56

Illinois WC Commission Operations Fund Surcharge

Purpose

Funds the Illinois WC Commission Operations Fund

Base

Direct Written Premium—Previous Calendar Year

Rate

1.01%

Carrier Payment

Annually—July 1

Type

Premium Surcharge—Not Reflected in Loss Costs or Rates

29



Company‐Use Only Statistical Codes

57

Reserved for internal use

Unit Statistical Reporting Guidebook

Not reported to NCCI

Map to NCCI class/stat code



NCCI Classification NCCI Class Code Description

5213 Demolition and Wrecking

Company‐Use Class Code Subclassification Descriptions

9730 Demolition and Wrecking Building 1–3 Floors Only (Rate $16.00)

9731 Demolition and Wrecking Buildings 4 Floors and Over (Rate $18.00)

Example: Company‐Use Only Mapping

58

30



NCCI Classification NCCI Class Code Description

5213 Demolition and Wrecking

Company‐Use Class Code Subclassification Descriptions

9730 Demolition and Wrecking Building 1–3 Floors Only (Rate $16.00)

9731 Demolition and Wrecking Buildings 4 Floors and Over (Rate $18.00)

Example: Company‐Use Only Mapping

59



Company‐Use Class Code Rate

Estimated Exposure

AuditedExposure

FinalPremium

9730 $16.00 200,000 323,805 $51,809

9731 $18.00 1,000,000 1,291,982 $232,557

Weighted Average Calculation

([323,805 X 16.00] + [1,291,982 X 18.00]) 28,436,556$17.60

(323,805 + 1,291,982) 1,615,787

Combining Subclassifications

60

Unit Statistical Reporting Guidebook: Part 4‐K

31



Wobbly Wheel Game

61

Pass‐Through—Not Premium

Small Deductible State Guide

Company Use Stat Codes

No Exposure Developed

Statistical Code 9757

Statistical Code 9740

State With Largest Population

Split Period Indicators (0–9)


Thank You for Attending

Supplemental Information

Presenter Biographies

Richard Saltzman has more than 30 years of experience in the insurance industry, including 20 years of insurance company experience. Richard works in Data Services, and his responsibilities include data reporting compliance projects, industry communications, and working on NCCI’s data reporting manuals.

Stephan Cartright currently works as a Unit Data Analyst in the Data Resources Division; he has been with NCCI for 15 years. Stephan’s primary responsibilities include unit reporting and answering rules questions.

Stephan started in Customer Operations as a Customer service representative on the Mods Team.

unit statistical data— premium rating programs and exposures · 01 5474 $50,000 1.53 $765 1.000...

Documents