The Connecticut Insurance Department approved the proposed workers’ compensation loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 14.1% decrease. The CID also approved an overall assigned risk rate decrease of 8.2%. These loss costs and rates will take effect Saturday, Jan. 1, 2022. For more on the CID approval, see its online Memorandum and Order.
In support of the filing, NCCI made the following key observations:
- Reported claims resulting from COVID-19 have been excluded from this filing data;
- loss experience improved in the latest policy year (2018-19);
- lost-time claim frequency continues its downward trend over the last nine years; and
- indemnity and medical costs per claim have declined over the same nine years.
Components of the 14.1% reduction in the overall loss cost level include changes in: 1. experience at -13.3%; 2. trend at -1.7%; 3. benefits at +0.6%; and 4. loss-based expenses at 0.2%.
Terrorism/cat loss. The terrorism voluntary loss cost remains at $0.025 and the assigned risk terrorism rate remains at $0.03. There is no change in the catastrophe charge of $0.01.
Distribution. The 14.1% reduction in the overall loss cost level is broken down by industry sector as follows: manufacturing (-13.2%); contracting (-13.7%); office and clerical (-16.6%); goods and services (-14.3%); and miscellaneous (-13.4%). 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 2022 workers’ compensation rates, loss costs and loss cost multipliers in the PIA QuickSource library.
Maximum/minimum payroll. The maximum payroll for executive officers or members of limited liability companies increases from $2,700 to $2,900, and the minimum payroll increases from $1,350 to $1,450. However, the premium basis for a sole proprietor and partners increases from $71,400 to $75,200.
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.
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. 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 by individual insurers periodically. However, these changes do not need to coincide with the loss costs approved for Saturday, Jan. 1, 2022.