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Texas Biennial Hearing

Texas Biennial Hearing. December 17, 2012. t erri_robinson @ncci.com 501-333-2835 ann_marie_smith@ncci.com 561-893-3781. NCCI’s Role in Texas. Statistical Agent Services Collection and validation of various types of data Summarizing data and providing reports to TDI

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Texas Biennial Hearing

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  1. Texas Biennial Hearing December 17, 2012 terri_robinson@ncci.com 501-333-2835 ann_marie_smith@ncci.com 561-893-3781

  2. NCCI’s Role in Texas Statistical Agent Services • Collection and validation of various types of data • Summarizing data and providing reports to TDI • Advisory Organization Services • Production of experience rating modifications • Third loss cost filing is pending • Proof of Coverage Vendor • Supply policy transaction information to TDI

  3. State of the Industry Countrywide Vs. Texas

  4. Countrywide Workers Compensation Premium—First Increase in YearsNet Written Premium $ Billions Calendar Year Source: 1990–2010 Private Carriers, Annual Statement Data; 2011, NCCI 1996–2011 State Funds: AZ, CA, CO, HI, ID, KY, LA, MD, MO, MT, NM, OK, OR, RI, TX, UT Annual Statements State Funds available for 1996 and subsequent

  5. Texas Workers Compensation Premium Volume IncreasesDirect Written Premium Source: NAIC Annual Statement data

  6. Countrywide Accident Year Net Combined RatioWorkers Compensation Calendar Year vs. Ultimate Accident Year Private Carriers Percent Accident Year data is evaluated as of 12/31/2011 and developed to ultimate Source: Calendar Years 2002–2011, Annual Statement Data; Ultimate Accident Years 2001–2011, NCCI analysis based on Annual Statement Data Includes dividends to policyholders

  7. Texas Accident Year Combined Ratios Sources: NCCI financial data, NAIC Annual Statement data

  8. Results Vary From State to StateAccident Year 2010 Combined Ratios Data is evaluated as of 12/31/2010

  9. Workers Compensation Premium Rate RankingPremium Rate Index per $100 of Payroll TX Ranking 14th (out of 51). Source: 2012 Oregon Workers’ Compensation Premium Rate Ranking Summary Indexes based on rates in effect on January 1, 2012

  10. Average Voluntary Pure Loss Costs Quartiles WA ID MT ME MN ND OR NH VT WI NY SD MI MA WY CA NV RI IA PA UT NE CT OH IL IN NJ CO WV DE MO VA OK AK KS MD KY DC AZ NC NM TN OK TX AR SC GA AL MS LA FL HI Texas = $0.66 Countrywide = $1.14 Based on the latest NCCI approved rates and loss costs in the various states.

  11. NCCI’s Loss Cost Filings in Texas 11 * Filing is pending

  12. Average Voluntary Pure Loss Costs Quartiles Using Texas Payroll Distribution WA ID MT ME MN ND OR NH VT WI NY SD MI MA WY CA NV RI IA PA UT NE CT OH IL IN NJ CO WV AK DE MO VA OK KS MD KY DC AZ NC NM TN OK TX AR SC GA AL MS LA FL HI Countrywide = $0.94 Texas = $0.66 Based on the latest NCCI approved rates and loss costs in the various states.

  13. Countrywide vs. Texas Experience Rating Source: Average Experience Rating Modifications produced by NCCI

  14. Countrywide vs. Texas Experience Rating Source: Average Experience Rating Modifications produced by NCCI

  15. Manufacturing Number of Texas Policies by Industry Group Compared with Countrywide/Region Contracting Goods & Services Office & Clerical Miscellaneous Regional states are AR, LA, NM, and OK Countrywide and Regional Averages do not include Texas. Based on NCCI’s Statistical Plan data

  16. Claim Frequency

  17. Countrywide Workers Compensation Lost-Time Claim Frequency Declined in 2011Lost-Time Claims Percent Cumulative Change of –55.5% (1991–2010 adjusted) -1 2011p: Preliminary based on data valued as of 12/31/2011 1991–2010: Based on data through 12/31/2010, developed to ultimate Based on the states where NCCI provides ratemaking services, including state funds; excludes high deductible policies Frequency is the number of lost-time claims per $1M pure premium at current wage and voluntary loss cost level Accident Year

  18. Texas Claim Frequency Based on NCCI’s financial data Frequency of lost-time claims adjusted to a common wage level

  19. Texas Workers Compensation Lost-Time Claim FrequencyLost-Time Claims Percent Change Cumulative Change of -4.9% (1998–2010) Based on data through 12/31/2011, developed to ultimate

  20. Texas Average Claim FrequencyFrequency per 100,000 Workers—All Claims Based on NCCI’s Statistical Plan data

  21. Key Takeaways— Claim Frequency

  22. Indemnity Severity

  23. Countrywide Workers Compensation Indemnity Claim Costs—Modest Increase in 2011Average Indemnity Cost per Lost-Time Claim Indemnity Claim Cost ($ '000s) Annual Change 1991–1993: –1.7% Annual Change 1994–2001: +7.3% Annual Change 2002–2010: +3.4% Accident Year 2011p: Preliminary based on data valued as of 12/31/2011 1991–2010: Based on data through 12/31/2010, developed to ultimate Based on the states where NCCI provides ratemaking services, including state funds Excludes high deductible policies

  24. Texas Average Indemnity Severity . 15.3 AY 11 Based on NCCI’s financial data for lost-time claims at current benefit level and developed to ultimate

  25. Texas Average Indemnity Claim SeverityLost-Time Claims Indemnity Severity ($ '000s) The severity figures shown are in excess of wage trend Based on data through 12/31/2011, on-leveled and developed to ultimate.

  26. Texas vs. Countrywide Average Indemnity Claim Severity *Preliminary Source: NCCI financial data valued as of 12/31/2010 for Countrywide AY 2007 – 2010 Source: NCCI financial data valued as of 12/31/2011 for Countrywide AY 2011 and Texas AY 2007 - 2011

  27. Average Indemnity Claim Severity in the Region Based on NCCI’s financial data for lost-time claims

  28. Key Takeaways— Texas Indemnity Benefit Costs

  29. Medical Severity

  30. Indemnity Medical Medical Benefits Constitute the Majority of Total Benefit Costs in Texas Regional states are AR, LA, NM, and OK Based on NCCI’s Statistical Plan data

  31. Countrywide Workers Compensation Medical SeverityModerate Increase in 2011 Average Medical Cost per Lost-Time Claim Medical Claim Cost ($ '000s) Annual Change 1991–1993: +1.9% Annual Change 1994–2001: +8.9% Annual Change 2002–2010: +6.0% 2011p: Preliminary based on data valued as of 12/31/2011 1991–2010: Based on data through 12/31/2010, developed to ultimate Based on the states where NCCI provides ratemaking services, including state funds Excludes high deductible policies Accident Year

  32. Texas Average Medical Severity . 23.5 AY 11 Based on NCCI’s financial data for lost-time claims at current benefit level and developed to ultimate

  33. Texas Average Medical Claim Severity Lost-Time Claims Medical Severity ($ '000s) The severity figures shown are in excess of wage trend Based on data through 12/31/2011, on-leveled and developed to ultimate

  34. Texas vs. Countrywide Average Medical Claim Severity *Preliminary Source: NCCI financial data valued as of 12/31/2010 for Countrywide AY 2007 – 2010 Source: NCCI financial data valued as of 12/31/2011 for Countrywide AY 2011 and Texas AY 2007 - 2011

  35. Average Medical Claim Severity in the Region Based on NCCI’s financial data for lost-time claims

  36. Key Takeaways— Texas Medical Benefit Costs

  37. Closing RemarksThank you!

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