The Connecticut Insurance Department approved the proposed workers’ compensation loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 9.8% decrease. Also approved is an overall assigned risk rate reduction of 10.5%. These loss costs and rates will take effect Monday, Jan. 1, 2024. For more on the CID approval, see its online Memorandum and Order.
In support of the filing, NCCI made the following key observations:
- Generally, the selected annual loss ratio trends in this year’s filing are primarily based on observed longer-term patterns.
- The primary driver of the proposed change is improved experience.
- Reported COVID-19-related claims have been excluded from the data on which this filing is based.
- The benefit change reflects the impact of recent updates to the Connecticut medical fee schedule.
- This filing proposes a decrease to the assigned risk profit and contingency provision from 1% to 0%, which considers the notable shift in interest rates in recent years and is the main difference between the advisory loss cost change and the assigned risk rate level change.
- Additional proposed methodology changes in this filing include changes to experience rating values, occupational disease provisions, and calendar year wage adjustments.
Key Components
Components of the 9.8% reduction in the overall loss cost level include changes in experience, trend and benefits at -10%; and loss-based expenses at +0.2%.
Terrorism/Cat Loss
The terrorism voluntary loss cost remains at $.025 and the assigned risk terrorism rate remains at $.03. There is no change in the catastrophe charge of $.01.
Distribution
The 9.8% reduction in the overall loss cost level is broken down by industry sector as follows: manufacturing (-11%); contracting (-10%); office and clerical (-9.2%); goods and services (-11%); and miscellaneous (-6.3%). 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 PIA QuickSource document No. 06124.
Maximum/minimum payroll
The maximum payroll for executive officers or members of limited liability companies remains at $3,200 and the minimum payroll increases from $1,500 to $1,600. The premium basis for a sole proprietor and partners remains at $81,900.
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 is indexed by the countrywide severity change. For 2024, the split point remains at $20,000.
Residual market
There is an increase in the Assigned Risk Loss Cost Differential from 1.491 to 1.500. 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
In order to convert voluntary loss costs to rates, the insurer’s loss cost multiplier must be applied. These LCMs are filed with the Insurance Department and are changed periodically by individual insurers. However, these changes need not coincide with the loss costs approved Jan. 1, 2024. See PIA QuickSource document No. 06146 for the latest multipliers.
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.
