NCCI 2021 WC loss cost decrease of 5.5%

February 10, 2021

The Vermont Department of Financial Regulation approved the original workers’ compensation voluntary loss-cost filing made by the National Council on Compensation Insurance, consisting of an overall 5.5% decrease. Additionally, a decrease of 4.6% of the overall assigned risk rates was approved as filed. These loss costs and rates will take effect Thursday, April 1, 2021.

NCCI made the following key observations that affect loss costs and rates in Vermont:

  • The filing is based on premium and loss experience for policy years 2016, 2017, and 2018, evaluated as of Dec. 31, 2019. This data does not reflect any COVID-19 pandemic effects.
  • Vermont’s lost-time claim frequency decreased 3.4% in the latest complete policy year available (2018).
  • After adjusting to a common-wage level, the indemnity average cost per case and medical average cost per case appear stable.

Key components

Components of the -5.5% loss cost reduction include changes in: 1. experience at -4.2%; 2. trend at 2.2%; 3. benefits at 0.0%; and 4. loss-based expenses at +0.9%.


The overall voluntary loss-cost change can be broken down by industry sector: manufacturing (-6.5%); contracting (-7.5%); office and clerical (-4.8%); goods and services (-5.5%); and miscellaneous (-3.0%). Keep in mind that the loss costs and rates for individual classifications may vary significantly. These are available to members by accessing Vermont 2021 workers’ compensation rates, loss costs and loss-cost multipliers in the PIA QuickSource library.

Benefit change

There were no benefit changes impacting industrial class codes in this year’s filing. The state average weekly wage is $935.50, which went into effect July 1, 2020. Therefore, the maximum workers’ compensation indemnity benefit (150% of SAWW) is $1,403, and the minimum workers’ compensation indemnity benefit (50% of SAWW) is $468 for injuries occurring on or after July 1, 2020.


The terrorism loss cost remains at 0.005 and the terrorism assigned risk rate remains at 0.01. The catastrophe—other than Certified Acts of Terrorism—loss cost and assigned risk rate also remain at 0.01.

Maximum/minimum payroll

You will notice that the maximum payroll for executive officers and limited liability company members increases from $3,600 to $3,700, but the minimum payroll remains at $450. The premium basis for sole proprietors and partners increases from $23,500 to $24,300.

Split point

The year 2015 was the third and final year of the split-point transition period for experience rating. In each subsequent loss-cost filing, the countrywide severity change will index the split point. For 2020, the split point increases from $17,500 to $18,000.

Loss-cost multipliers

In order to convert voluntary lost costs to rates, the insurer’s loss-cost multiplier must be applied. These LCMs are filed with the DFR and are changed periodically by individual insurers. However, these changes don’t need to coincide with the loss costs approved April 1, 2020. See the current list of insurer LCMs in Vermont 2021 workers’ compensation rates, loss costs and loss-cost multipliers in the PIA QuickSource library.

Assigned risk plan

The 2021 assigned risk loss-cost multiplier increases to 1.434 from the 1.421 2020 multiplier. The expense constant remains at $160 and the maximum minimum premium of $1,200 does not change. Also, the flat differential—which reflects the general experience of risks in this market—remains at 1.20%. Market share in the plan has remained stable, at 12.6% in 2018.

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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