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Workers Compensation Reserve Issues in Selected States - PowerPoint PPT Presentation


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Workers Compensation Reserve Issues in Selected States. Nevada. Prior to July 1, 1999. Employers had two choices for workers compensation Monopolistic state fund (Employers Insurance Company of Nevada, formerly known as State Industrial Insurance System) Self-insurance Nevada-specific

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Presentation Transcript
prior to july 1 1999
Prior to July 1, 1999
  • Employers had two choices for workers compensation
    • Monopolistic state fund (Employers Insurance Company of Nevada, formerly known as State Industrial Insurance System)
    • Self-insurance
  • Nevada-specific
    • Classifications
    • Rates
    • Experience Rating
unique features of monopolistic fund
Unique Features of Monopolistic Fund
  • Continuous coverage rather than annual policies
  • Premium paid in arrears with accompanying payroll report
  • Mandatory $100 per claim deductible
after july 1 1999
After July 1, 1999
  • Private carriers enter Nevada market
  • National Council on Compensation Insurance serves as advisory organization
  • NCCI
    • Classifications
    • Rates
    • Rating plans
  • Residual market mechanism
transition to ncci rates and plans
Transition to NCCI Rates and Plans
  • NCCI applies to all policyholders effective July 1, 1999
    • New and renewal
    • Outstanding
  • Policyholders now purchase annual policies
    • Paid (at least partially) in advance
  • Old Nevada and new NCCI premiums widely divergent
    • Class definitions
    • Rates
    • E-mod formulas and rating values
transition plan implemented to alleviate large premium swings
Transition Plan Implemented to Alleviate Large Premium Swings
  • Calculate average modified rate for each policyholder
    • Using old Nevada rates and e-mod
    • Using new NCCI rates and e-mod
  • New average rate for each policyholder capped at
    • Old Nevada average modified rate
    • Plus statewide average rate change
    • Plus/Minus 25%
  • Details for subsequent years not yet determined
individual carrier deviations from ncci rates
Individual Carrier Deviations from NCCI Rates
  • Original plan for deviations
    • No downward deviations for the 1st year
    • Up to -5% for the 2nd year
    • Up to -10% for the 3rd year
    • Up to -15% for the 4th year
    • Loss costs after July 1, 2003
  • Revised plan for deviations
    • No downward deviations for the 1st year
    • Up to -15% for the 2nd year
    • Loss costs after July 1, 2001
recent legislation
Recent Legislation
  • Changes to loss cost phase-in period
  • Employers Insurance Company of Nevada allowed to convert to mutual insurance company
  • Benefit changes
reserving in nevada
Reserving in Nevada
  • Little historical data, and none specific to your company
    • Mostly paid data used in NCCI filing
    • Case reserving practices vary by company
  • Long payout pattern
  • Benefit Changes
    • Significant changes in 1993
    • Upcoming changes
  • Potentially volatile effects of economic conditions
    • Construction, tourism major parts of economy