NCCI 2021 loss cost decrease of 1.8% approved

December 23, 2020

The Connecticut Insurance Department approved the proposed workers’ compensation loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 1.8% decrease. An overall assigned risk rate decrease of 1.4% was approved. These loss costs and rates will take effect Friday, Jan. 1, 2021. For more on the CID approval, see its online Memorandum and Order.

In support of the filing, NCCI made the following key observations:

  • Loss experience improved in the latest policy year (2017-18).
  • Lost time claim frequency continues its downward trend over the last eight years.
  • Indemnity and medical costs per claim has declined over the same eight years.

Key components

Components of the 1.8% reduction in the overall loss cost level include changes in: 1) experience at -3.8%; 2) trend at +0.9%; 3) benefits at +0.4%; and 4) loss-based expenses at +0.7%.

Terrorism/catastrophe loss

The terrorism voluntary loss cost remains at $.025 and the assigned-risk terrorism rate remains at $.03. There is no change in the catastrophe charge of $.01.


The 1.8% reduction in the overall loss cost level is broken down by industry sector: manufacturing (+0.4%); contracting (-2.4%); office and clerical (-1.9%); goods and services (-2.4%); and miscellaneous (-2.0%). Keep in mind that, depending on the industry sector, loss costs for an individual classification could increase or decrease in significantly different amounts. For individual voluntary loss costs and assigned-risk rates, see Connecticut 2021 workers’ compensation rates, loss costs and loss-costs multipliers in the PIA QuickSource library.

Maximum/minimum payroll

The maximum payroll for executive officers or members of limited liability companies remains at $2,700 and the minimum payroll remains at $1,350. The premium basis for a sole proprietor and partners, however, increases from $69,100 to $71,400.

Split point

2015 was the third and final year of the split point-transition period for experience rating. In each subsequent loss cost filing, the split point will be indexed by the countrywide severity change. For 2021, the split point increases from $17,500 to $18,000.

Residual market

The flat differential (a reflection of the general experience of risks in this market) remains at 30%. There is no change in the Assigned Risk Adjustment Program (25% maximum—weighted for severity), the expense constant of $160, and the maximum minimum premium of $1,500.

Loss cost multipliers

In order to convert voluntary loss costs to rates, the insurer’s loss cost multiplier must be applied. These LCMs are filed with the CID and are changed periodically by individual insurers. However, these changes need not coincide with the loss costs approved Friday, Jan. 1, 2021.

Dan Corbin, CPCU, CIC, LUTC
PIA Northeast | + posts

Dan Corbin joined the PIA team in 1992 and is the association’s director of research. His insurance background spans 45 years, with varied experience as agency owner, commercial service representative, producer, personal-lines manager and insurance specialist for a mortgage lender. Each year, he responds to approximately 800 technical inquiries from members. Dan is a member of the Chartered Property Casualty Underwriter Society and the Society of Certified Insurance Counselors. On Jan. 1, 2021, he became a contracted provider of membership services.

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