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 7% decrease. In addition, a decrease of 7% of the overall assigned risk rates was approved as filed. These loss costs and rates will take effect Jan. 1, 2023. For more on the NHID approval, see the online bulletin.
NCCI made the following key observations that impact loss costs and rates in New Hampshire:
—This filing is based on premium and loss experience for Policy Years 2018 through 2020 evaluated as of Dec. 31, 2021. Reported COVID-19-related claims have been excluded from the data on which this filing is based.
- While all three years were relied upon, the Policy Year 2020 experience appears to be impacted by pandemic-related factors that are not likely to prevail during the loss cost effective period. As a result, the experience in PY 2020 was given less weight. See COVID-19 Pandemic Ratemaking Considerations and Adjustments in the Additional Proposed Changes section for additional information.
—The medical loss ratio trend selection was decreased by 0.5%, supported by exponential trend fits excluding Policy Year 2020.
—Generally, New Hampshire’s claim frequency has been declining, but increased in Policy Year 2020. This may be driven, to some extent, by the impact of the COVID-19 pandemic and the larger than typical decrease seen from Policy Year 2018 to Policy Year 2019.
—After adjusting to a common wage level, medical average cost per case declined sharply in Policy Year 2020, driving the improvement in medical loss ratio experience.
Components of the -7% loss cost reduction include changes in: 1. experience at -6%; 2. trend at -1.3%; 3. benefits at 0%; and 4. loss-based expenses at +0.2%. Keep in mind that the changes in loss costs and rates for individual classifications may vary significantly. These are available to PIA Northeast members by accessing 2023 New Hampshire Voluntary Workers’ Compensation Loss Costs and Residual-Market Rates.
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.
You will notice that the maximum payroll for executive officers and limited liability company members increases from $5,000 to $5,500, and the minimum payroll increases from $600 to $700. The maximum payroll for executive officers of an unincorporated association increases from $2,500 to $2,800, and the minimum payroll increases from $300 to $350. Also, the premium basis for a sole proprietor and partners increases from $32,300 to $35,900.
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 2023, the split point remains at $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 need not coincide with the loss costs approved Jan. 1, 2023. The current list of insurer LCMs is located here.
Assigned risk plan
The 2023 assigned risk loss cost multiplier is unchanged at 1.522. 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 6.6% in Policy Year 2021.
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.