Insurance and risk management professionals who are monitoring the coming change to the workers’ compensation experience rating process will be interested in these brief pieces of news related to the 2013 split point change:
First of all, NCCI has a new 24-minute webinar, Understanding NCCI’s Filed Experience Rating Plan Changes – Item E-1402. This webinar includes:
- What has prompted the change to the primary-excess split point.
- What potential impacts to the mod can be expected.
- Most helpfully, several hypothetical examples are discussed. Especially notable in this section is how employer size and the relationship of class severity to discount ratio may affect the mod in conjunction with the new split point.
A majority of states have already approved the split point change to take effect with their 2013 loss cost or rate filing, but what of the independent bureaus?
New York is on track for a split point change to $10,000 effective 10/1/2013.
The New York Compensation Insurance Rating Board (NYCIRB) says in its NYCIRB Annual Report 2011 (pdf):
…the [Actuarial] Committee approved an increase in the split point from the current $5,000 to at least $15,000 in several steps, with the first step to be set at $10,000 effective October 1, 2013. Further research was recommended to determine appropriate split points subsequent to that date.
Wisconsin has the split point change under consideration, but not yet approved.
In September 2011, Circular Letter 1137 from the Wisconsin Compensation Rating Bureau (WCRB) says:
The [Wisconsin Governing] Board adopted the recommendation of the Rating Committee to adopt this proposal [item E-1402] effective with the 10-1-13 rate revision.
However, in December 2011, Circular Letter 1139 (pdf) states that
This item [E-1402] was disapproved by the OCI [Office of the Commissioner of Insurance]. WCRB will respond to the items of concern and request reconsideration of the disapproval.
Other independent states which use similar rating methodology but do not use NCCI for interstate intrastate mods are Michigan, Minnesota, and Texas. If those states have a split point change under consideration or approved, I’ve not yet seen such information. If you’re in those states and have heard any news regarding the split point, I know our readers would love for you to share via a comment!
– Kory Wells, WorkCompEdge Blog Editor
© 2012 Zywave, Inc. All rights reserved. For reprint permission, contact the blog editor.
Further reading:
New Report Estimates Mod Change Due to 2013 Split Point Value
Thank you Kory. This is great information. Regarding New York joining NCCI on the split point change, is this a done deal, or do additional regulatory hurdles need to be jumped?
Hi, Michael – Thanks for checking in, and I’m glad to know you find the information helpful. I strongly suspect that the NY state insurance department also has to sign off on the change, just as they do for loss costs and rating values, but I don’t know that for a fact. If memory serves, the NYCIRB mentioned that they wanted to study this change almost a year ago, so I feel like they’ve probably been thorough and we’re likely to see this change take effect in NY.
All best,
Kory
Is there a list of states that have already approved the split point somewhere?
Hi, Marietta,
As of early April, the only NCCI states that have NOT approved the split point are
Colorado, Connecticut, Florida, Illinois and Missouri
Additionally, there’s been no work from the independent/semi-independent states of
Massachusetts, Michigan, Minnesota, and Texas
The independent states of NY and WI have approved the change, both as of 10/1/2013.
If you use ModMaster, go to the Next Steps screen and search Broker Briefcase for “2013 split point” change to find a Briefcase document we are updating monthly with this information. (Broker Briefcase users can search directly in BB for this document as well.)
All best,
Kory
Just a quick technicality, but I think the last paragraph should say “intrastate”, meaning within only one state, instead of “interstate”, meaning between multiple states. Both Minnesota and Texas participate in NCCI interstate mods, but produce their own intrastate mods.
I’ll now be sending all my blogs to you to read before I publish them, Jason. 🙂 You are correct. I was trying to keep the post short and sweet, but your comment inspires me to provide some more info here about the independent bureaus, for anyone interested in the nitty-gritty details:
(For any readers new to rating, INTERstate means multiple states are included in the mod because the risk has operations in multiple states; INTRAstate means the mod reflects a risk’s operations in a single state.)
The NCCI Experience Rating Plan Manual specifically excludes New York, Minnesota, Texas and Wisconsin EXCEPT in the case of interstate rating. These states have their own manuals for intrastate rating and therefore, I assume, may look at the split point change especially carefully since they’ll have to change their own manuals.
Additionally, Indiana, Massachusetts, and North Carolina also have independent bureaus which issue their own intrastate mods, but they use the NCCI Experience Rating Plan rather than having their own manual to follow for both intra- and interstate rating. So for these states I would assume approval of the split point may not be quite as involved.
Michigan has its own manual and does not participate in any interstate rating, but its plan is very similar to the NCCI plan.
California, New Jersey and Pennsylvania/Delaware have their own bureaus and plans notably different from the NCCI plan, so the split point discussion does not apply to these states at all.
Thanks again for the catch – I’m delighted to have readers paying close attention!
Kind regards,
Kory
Well, Kory, you have done it again. You always keep us more than well informed. I am so happy that you have remained editor of the WorkersCompEdgeBlog. I am SO glad Jason caught that technicality regarding Interstate vs. Intrastate, because as I am sure you know, I would have. You certainly have heard from me often enough over the years.
Anyway, thanks for keeping the WorkersCompEdgeBlog (a really good thing) going and keep in touch.
Best regards,
Bill Gardner
Aw, thanks, Bill – and yes, Jason just beat you to it, or you would’ve called me on that, I am 100% sure. 🙂 You being in touch over the years has unfailingly provided me an opportunity to be “on my toes” in terms of industry knowledge and software product ideas. I truly appreciate it!
All best,
Kory
Kory,
Connecticut has not approved the split point yet. Contractor organizations are very concerned and have been contacting the Connecticut Insurance Department with their concerns. They would like to see a 5 to 7 year transition in lieu of the 3 year as proposed.
Thanks for that information, Jim – it’s interesting to hear a tidbit of what might be going on behind the scenes in some of the states that have yet to approve the change.
For readers who may be new to the implications of a change in the mod, contractors may be particularly concerned since they are often required to have a mod of 1.0 or less in order to bid on jobs. For these types of employers, an increase in premium is the least of their worries, as a mod increase of a only a point or two could make them ineligible to bid on certain jobs.
Jim, if you hear more, I’d love for you to share again.
All best,
Kory