The Connecticut Insurance Department approved the proposed workers’ compensation loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 3% decrease. Also approved is an overall assigned risk rate change of 0%. These loss costs and rates will take effect on Jan. 1, 2023. For more on the CID approval, see its online Memorandum and Order.
In support of the filing, NCCI made the following key observations:
- This filing is based on premium and loss experience for Policy Years 2019 and 2020.
- Reported COVID-19-related claims have been excluded from the data.
- Despite a small uptick in the latest policy years, Connecticut’s lost-time claim frequency generally has declined when viewed over the most recent eight years.
- Connecticut’s indemnity and medical average cost per case figures have experienced relatively more variability in recent years with large increases in Policy Year 2019 followed by moderate to large decreases in Policy Year 2020.
Components of the 3% reduction in the overall loss cost level include changes in experience, trend and benefits at -3.2%; and 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 3% reduction in the overall loss cost level is broken down by industry sector as follows: manufacturing (-2.5%); contracting (-4.6%); office and clerical (-5.3%); goods and services (-2,8%); and miscellaneous (-0.7%).
Keep in mind,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 QS06124 in the PIA QuickSource library.
Maximum/minimum payroll. The maximum payroll for executive officers or members of limited liability companies increases from $2,900 $3,000 and the minimum payroll increases from $1,450 to $1,500. The premium basis for a sole proprietor and partners, however, increases from $75,200 $78,500.
Split point. The third and final year of the split point transition period for experience rating was 2015. In each subsequent loss cost filing, the split point is indexed by the countrywide severity change. For 2023, the split point remains at $18,500.
Residual market. There is an increase in the Assigned Risk Loss Cost Differential from 1.439 to 1.491. 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 periodically by individual insurers. However, these changes need not coincide with the loss costs approved Jan. 1, 2022. For the latest multipliers, see QS06146 in the PIA QuickSource library.
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.