The Vermont Department of Financial Regulation approved the revised workers’ compensation voluntary loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 6.7% decrease. In addition, a decrease of 6.9% of the overall assigned risk rates was approved. These loss costs and rates will take effect Saturday, April 1, 2023. For more on the DFR approval, see the online press release.
Components of the -6.9% loss cost reduction include changes in: 1. experience, trend and benefits at 6.8%; and 2. loss-based expenses at +0.1%.
The overall voluntary loss cost change can be broken down by industry sector as follows: manufacturing (-7.8%); contracting (-6.1%); office and clerical (-5.4%); goods and services (-6.8%); and miscellaneous (-6.7%). Keep in mind that the loss costs and rates for individual classifications may vary significantly. These are available to members by accessing QS44007 in the PIA QuickSource library.
The state average weekly wage is $1.069, effective July 1, 2022. Therefore, the maximum workers’ compensation indemnity benefit (150% of SAWW) increases from $1,542 to $1,604. The minimum workers’ compensation indemnity benefit (50% of SAWW) grows to $535 for injuries occurring on or after July 1, 2022.
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.
You will notice that the maximum payroll for executive officers and limited liability company members increases from $4,100 to $4,300. The minimum payroll raises to $550 from $500. The premium basis for sole proprietors and partners increases from $26,700 to $27,800.
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. The split point remains at $18,500 in 2023.
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 DFR and are changed periodically by individual insurers. However, these changes need not coincide with the loss costs approved on April 1, 2023. The current list of insurer LCMs can be found in QS44007 in the PIA QuickSource library.
Assigned risk plan
The 2023 assigned risk loss cost multiplier decreases to 1.421 from the 2022 multiplier of 1.424. The expense constant remains at $160. The maximum minimum premium of $1,200 does not change. The flat differential, which reflects the general experience of risks in the market, remains at 1.20%. Market share in the Vermont plan remains at 8.5% (compared to 5.3% for all NCCI jurisdictions).
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.