Conn.: NCCI 2025 WC loss cost decrease of 6.1% approved

November 20, 2024

The Connecticut Insurance Department approved the proposed workers’ compensation loss cost filing made by the National Council on Compensation Insurance, consisting of an overall 6.1% decrease. Also approved is an overall assigned risk rate reduction of 6.2%. These loss costs and rates will take effect Wednesday, Jan. 1, 2025. 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.
  • The proposed loss cost change includes an increase to the loss expense provision.
  • 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 0.0% to -1%, which considers the notable shift in interest rates in recent years. The proposed assigned risk rate level change also includes a proposed increase to the assigned risk differential along with an updated assigned risk servicing carrier allowance.
  • Additional proposed methodology changes in this filing include a change to the selected assigned risk market share. Refer to the Additional Proposed Changes section for additional information.

Key components. Components of the 6.1% reduction in the overall loss cost level include changes in experience at -6.3%; development at -0.1; trend at -1.1%; benefits at +0.5%; and all other at +1%.

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 6.1% reduction in the overall loss cost level is broken down by industry sector as follows: manufacturing (-8%); contracting (-6.9%); office and clerical (-5.6%); goods and services (-5.2%); and miscellaneous (-5.7%). 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, PIA Northeast members can access QS06124 in the PIA QuickSource library.

Maximum/minimum payroll. The maximum payroll for executive officers or members of limited liability companies increases from $3,200 to $3,300 and the minimum payroll increases from $1,600 to $1,650. The premium basis for a sole proprietor and partners increases from $81,900 to $86,000.

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 2025, the split point increases to $20,500.

Residual market. There is an increase in the Assigned Risk Loss Cost Differential from 1.500 to 1.550. 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 Wednesday, Jan. 1, 2025. For the latest multipliers, PIA Northeast members can access QS06146, in the PIA QuickSource library.

Dan Corbin, CPCU, CIC, LUTC
PIA Northeast | + posts

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.

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