The New Hampshire Insurance Department approved the original workers’ compensation voluntary loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 8% decrease. Additionally, a decrease of 10.4% of the overall assigned risk rates was approved as filed. These loss costs and rates will take effect Jan. 1, 2022. For more on the NHID approval, see the online bulletin.
The NCCI made the following key observations that impact loss costs and rates in New Hampshire:
- The overall loss cost level change in this filing is based on premium and loss experience for policy years 2017, 2018, and 2019, evaluated as of Dec. 31, 2020. The reported claims resulting from COVID-19 have been excluded from the data on which this filing is based.
- Generally, New Hampshire’s claim frequency has been declining.
- After adjusting to a common wage level, indemnity average cost per case remains fairly stable while medical average cost per case has decreased in the last three full policy years.
- The loss cost change varies by classification code, each of which belongs to one of five industry groups. The average change by industry group ranges from -9.1% for office and clerical to -7.5%, for manufacturing.
Rating components
Components of the -8% loss cost reduction include changes in: 1. Experience at -8.6%; 2. Trend at -0.8%; 3. Benefits at 0%; and 4. Loss-based expenses at 0.1%.
Keep in mind that the changes in loss costs and rates for individual classifications may vary significantly. To review these changes, access 2022 New Hampshire voluntary workers’ compensation loss costs and residual-market rates in the PIA QuickSource library.
Terrorism/catastrophe. 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 remains at 0.01.
Maximum/minimum payroll. The maximum payroll for executive officers and limited liability company members increases from $4,500 to $5,000, and the minimum payroll increases from $550 to $600. The maximum payroll for executive officers of an unincorporated association increases from $2,200 to $2,500, and the minimum payroll increases from $275 to $300. Also, the premium basis for a sole proprietor and partners increases from $29,200 to $32,300.
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 2022, the split point increases from $18,000 to $18,500.
Loss cost multipliers. To convert voluntary loss costs to rates, the insurer’s loss cost multiplier must be applied. These LCMs are filed with the NHID and are changed periodically by individual insurers. However, these changes do not need to coincide with the loss costs approved for Jan. 1, 2021. To access the current list of insurer LCMs, visit the NHID’s website.
Assigned risk plan. The 2022 assigned risk LCM decreases to 1.522 from the 2021 multiplier of 1.563. Insurers having an approved LCM higher than the plan must advise policyholders that a lower premium is available in the plan. Market share in the plan has decreased to 8.5% in Policy Year 2020.
The expense constant remains at $160 and the maximum minimum premium of $1,000 does not change. Also, the flat differential—which reflects the general experience of risks in this market—remains at 25%.
Dan Corbin, CPCU, CIC, LUTC
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.
