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					CASUALTY ACTUARIAL SOCIETY
   RATEMAKING SEMINAR
      March 11 – 12, 2004
   New York Workers Compensation
       Ratemaking & Other Issues

       Martin G. Heagen, CPCU, WCCP
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION


    •   Loss Ratio Projections
    •   Trend
    •   Classification Pricing
    •   Rate Filing History
    •   Individual Risk Pricing
    •   Unique New York Issues
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION


             Ultimate Loss Ratios

   Incurred Method


               Paid Method
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                                  Ultimate Indemnity Loss Ratios
                         0.80
                         0.70
  Est. Ult. Loss Ratio




                         0.60
                         0.50
                         0.40                                             Incurred
                         0.30                                             Paid

                         0.20
                         0.10
                                1994 1995 1996 1997 1998 1999 2000 2001
                                              Policy Year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                                   Ultimate Medical Loss Ratios

                          0.4
  Est. Ult. Loss Ratio




                         0.35
                          0.3
                         0.25
                                                                          Incurred
                          0.2                                             Paid
                         0.15
                          0.1
                                1994 1995 1996 1997 1998 1999 2000 2001
                                              Policy Year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                     Trend

   Claim Frequency


              Claim Cost


                        Loss Ratio
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                           Indemnity Claim Frequency
                          (Claims per $1 M Premium at Present Rates)

              20
              18
              16
              14
  Frequency




              12
              10
               8
               6
               4
               2
               0
                   1994      1996         1998        2000      2002(est)   2004(?)
                                             Policy year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                            Medical Claim Frequency
                          (Claims per $1 M Premium at Present Rates)


              60
              50
  Frequency




              40
              30
              20
              10
              0
                   1994    1996        1998        2000      2002(est) 2004(?)
                                         Policy year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                             Average Indemnity Claim Cost

              35000
              30000
              25000
 Claim Cost




              20000
              15000
              10000
              5000
                  0
                      1994     1996     1998     2000   2002(est)   2004(?)
                                         Policy Year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                            Average Medical Claim Cost

              6000
              5000
 Claim Cost




              4000
              3000
              2000
              1000
                0
                     1994     1996    1998     2000   2002(est) 2004(?)
                                       Policy year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                  Classification Ratemaking

 • 9 Industry Groups
       - Food & Beverage Mfg.
       - Chemical Mfg.
       - All Other Mfg.
       - Contracting
       - Stores & Dealers
       - Prof. & Office
       - Services
       - Miscellaneous
       -Maritime, Admiralty, Federal
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
        Classification Ratemaking Continued

 • Industry Group Differentials
 • 5 Years of Data Irrespective of Class Size
 • 9/11/2001 Losses (Cat 48) Excluded
 • Class Credibility Based on Losses, Separately for
   Serious, Non- Serious & Medical
 • Class Changes Limited To +/- 25%
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                                   Historical Rate Level Changes

                       10
 % Rate Level Change




                        5

                        0

                        -5

                       -10

                       -15

                       -20
                             1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
                                               Calendar year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                                            Individual Risk Pricing

                               18
                               16
   % Below Manual Rate Level




                               14
                               12
                               10
                                                                                Deviations
                                8
                                                                                Dividends
                                6
                                                                                Total
                                4
                                2
                                0
                                    1992   1994   1996    1998    2000   2002
                                                  Calendar Year
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
                    Unique New York Issues

 3rd Party Liability (Dole vs. Dow)
       Section 110- Small Claims
 Total Medical Costs Less Than 40% of Total losses
        Last Benefit Change - 1992
  Duration of Permanent Partial Claims
         9/11/2001 Effect
  Payroll Limitation For Construction Classes
         Special Funds Assessments
 CAS RATEMAKING SEMINAR
NEW YORK WORKERS COMPENSATION
    New York Workers Compensation
      Ratemaking & Other Issues


         Questions & Answers

				
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