North Carolina Rate Bureau Presentation to The Appalachian State by MikeJenny

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									     Presentation to:

  The Appalachian State
        University’s
Brantley Risk and Insurance
          Center

 Worker’s Compensation
      Symposium
North Carolina’s Worker’s Compensation System
                    Today:


Is the compensation bargain still
 working for both employers and
     employees in our state?
The Rate Bureau’s Role in the WC Bargain.

   Promulgate and propose rates for loss
    costs and residual market rate filings.
   Administer the “difficult to place” assigned
    risk plan for employers.
   Maintain a compendium of employers
    refused voluntary coverage.
   Promulgate and propose rules, policy
    forms and rating plans for WC policies.
         The North Carolina Insurance
             Guaranty Association
   Experience with WC claims.
   Have paid more than $145 million in WC
    claims.
   Have participated in the claims adjusting
    process through the Supreme Court.
                            The Bargain

   …every employer and employee…shall be presumed to have
    accepted the provisions of this Article respectively to pay and accept
    compensation for personal injury or death by accident arising our of
    and in the course of his employment…NCGS 97-3
   Every employer subject to the compensation provisions of this
    article shall secure the payment of compensation to his employees
    in the manner hereinafter provided…NCGS 97-9
   Every employer subject to the provisions of this Article relative to
    the payment of compensation shall either:
          (1) Insure and keep insured his liability under this Article in any
    authorized corporation…or
          (3) Obtain a license from the Commissioner of Insurance (to
    self insure their workers compensation obligations)…NCGS 97-93
   (a) The rates charged by all carriers of insurance…shall be fair,
    reasonable, and adequate. NCGS 97-100(a)
We see the Rate Bureau’s part in the bargain as
providing one of the mechanisms for the
employer to “secure payment of compensation
to his employees.”

There are two parts to this, establishing rules,
forms and loss costs for use in pricing and policy
issuance for the voluntary market and the
administration and pricing of the assigned risk
program.
      Are we holding up our end of the bargain?


   Are loss costs and rates appropriate?
   Are “difficult to place” employers receiving
    what they need from the Assigned Risk
    Plan?
   Are loss costs and rates appropriate?


      2001                2005                2009
Loss Costs/Rates    Loss Costs/Rates    Loss Costs/Rates

 -1.4%    +5.2%      +9.4%     +8.7%     -9.6%     0.0%

      2002                2006          Average Change
Loss Costs/Rates    Loss Costs/Rates    Loss Costs/Rates


  0.0%      0.0%     +7.3%     +7.6%     +0.8%    +4.5%


      2003                2007            Accumulated
Loss Costs/Rates    Loss Costs/Rates        Change
                                        Loss Costs/Rates
 -1.0%     +5.0%     +1.6%      +4.1%    +7.3%      +40.8%

      2004                2008
Loss Costs/Rates    Loss Costs/Rates

 +2.0%      +5.0%    -4.4%      -3.8%
Are difficult to place employers receiving what they
                        need?
   Policy count and premium declining:
           37,000 and $95,000,000 in 2007
           30,000 and $72,000,000 in 2008
           25,000 and $55,000,000 in 2009
           21,000 and $42,000,000 in 2010 (estimate)
   Largest classes remain constant:
           Carpentry, detached 1 or 2 family
           Charitable or welfare organizations
           Carpentry, interior
           Painting or paper hanging
           Nursing, home health, public and traveling
   Average premium declining:
           $2600     2007
           $2400     2008
           $2300     2009
           $2000     2010 (estimated
   About 82% of applications are received electronically.
                       Factoids from current data.

   It is more expensive for carriers to issue policies:
          +2% for other acquisition expense
          +3% for loss adjusting expense
          uncollectible premiums are higher
   Percentage of indemnity vs. medical claims payments are different in NC than
    countrywide:
          Countrywide indemnity claims are 42% of claims payments and medical claims
          are 58%.
          In North Carolina indemnity claims are 52% of claims payments and medical
          claims are 48%.
   The trend for claims (severity, frequency) is -1.5% for indemnity and +0.5% for
    medical.
   Five year loss development is somewhat lower than originally anticipated.
                        Issues


   The data being prepared for the required
    September 1, 2010 filing for WC suggests:
        Voluntary loss costs +1-2%
        Residual market rates +5-6%
   Aggravated inequities.
   Minimum premiums.
   Contentious claims process.
   Experience modifications.

								
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