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 4.9% decrease. In addition, a decrease of 5.6% of the overall assigned risk rates was approved as filed. These loss costs and rates will take effect Friday, April 1, 2022. For more on the DFR approval, see the press release.
NCCI made the following key observations that impact loss costs and rates in Vermont:
- The filing is based on premium and loss experience for policy years 2017, 2018, and 2019, evaluated as of Dec. 31, 2020.
- Vermont’s lost-time claim frequency decreased 2.2% in the latest complete policy year available (2019).
- After adjusting to a common wage level, the indemnity and medical average cost per case exhibit a fairly flat trend over the long term.
Components of the -4.9% loss cost reduction include changes in:
- experience at -4.1%;
- trend at -1.1%;
- benefits at 0.0%; and
- loss-based expenses at 0.3%.
Distribution. The overall voluntary loss cost change can be broken down by industry sector as follows: manufacturing (-6.5%); contracting (-6.8%); office and clerical (-3.5%); goods and services (-4.1%); and miscellaneous (-4.0%).
Keep in mind that the loss costs and rates for individual classifications may vary significantly. These are available to members by accessing Vermont 2022 workers’ compensation rates, loss costs and loss-cost multipliers in the PIA QuickSource library.
Benefit change. The state average weekly wage is $1,028, which went into effect July 1, 2021. Therefore, the maximum workers’ compensation indemnity benefit (150% of SAWW) increases from $1,403 to $1,542, and the minimum workers’ compensation indemnity benefit (50 % of SAWW) increases from $468 to $514, for injuries that occurred on or after July 1, 2021.
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 remain at 0.01.
Maximum/minimum payroll. You will notice that the maximum payroll for executive officers and limited liability company members increases from $3,700 to $4,100, and the minimum payroll increases to $500 from $450. The premium basis for sole proprietors and partners increases from $24,300 to $26,700.
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 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 do not need to coincide with the loss costs approved for Friday, April 1, 2022. The current list of insurer LCMs is located in Vermont 2022 workers’ compensation rates, loss costs and loss-cost multipliers in the PIA QuickSource library.
Assigned risk plan. The 2022 assigned risk, loss cost multiplier decreases to 1.424 from the 2021 multiplier of 1.434. 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 increased from 7.9% (in 2019) to 8.5% (in 2020).