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Comparison of Montana to Assigned Risk Pools in Other States

Comparison of Montana to Assigned Risk Pools in Other States. Senate Bill 304 Study Committee November 7, 2003 Jerry Keck, Administrator Employment Relations Division Montana Department of Labor & Industry. Concerns – Questions To Be Addressed.

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Comparison of Montana to Assigned Risk Pools in Other States

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  1. Comparison of Montana to Assigned Risk Pools in Other States Senate Bill 304 Study Committee November 7, 2003 Jerry Keck, Administrator Employment Relations Division Montana Department of Labor & Industry

  2. Concerns – Questions To Be Addressed • Would the sale of State Fund result in increase in premium for Montana employers? • Would an increase in premiums cause more employers to go without workers’ compensation coverage? • What impact would this have on the Uninsured Employers Fund?

  3. Demographics of the Montana Market 2002Premium Dollars • Most analysis of the workers’ compensation market is by premium dollars 45% 40% 81M 72M 15% 27M

  4. Demographics of the Montana Market 2002Policy Count 82% 16.3% 1.7%

  5. Demographics of the Montana Market 2002Premium Dollars Compared to Policy Count 26,806 81M 72M 5,338 27M 542

  6. US Bureau of Labor Statistics*For Montana *Most current 1st quarter 2001 Private Sector Number of Business Establishments and Employees 31K 225K 72.6K 6.6K Employers with <10 Employees Employers with =>10 Employees

  7. US Bureau of Labor Statistics*Comparison of Montana to US *Most current 1st quarter 2001 Private Sector Number of Business Establishments and Employees Employers with <10 Employees Employers with =>10 Employees

  8. US Bureau of Labor Statistics*NCCI Assigned Risk Pool States Percentage of Employers with < 10 Employees

  9. NCCI Assigned Risk Pool 2002States Included in the Pool *These states have a competitive State Fund 1Arizona State Fund is “carrier of last resort by Board Policy” (.4% of Assigned Risk Pool) 2Idaho State Fund is “carrier of next to last resort” (1% of Assigned Risk Pool)

  10. NCCI Assigned Risk Pool Statistics 2002Premium Dollars of 24 NCCI States 40.2% 40.3% 449M 450M 19.5% 217M

  11. NCCI Assigned Risk Pool Statistics 2002Policy Count of 24 NCCI States 83.7% 14.6% 1.7%

  12. NCCI Assigned Risk Pool Statistics 2002Premium Dollars Compared to Policy Count of 24 NCCI States 184,292 449M 450M 217M 32,003 3,812

  13. Voluntary Market in 24 NCCI Assigned Risk Pool StatesPremium Dollars 63.7% 6.78B 27.2% 2.89B 9.1% 0.97B

  14. Voluntary Market in 24 NCCI Assigned Risk Pool StatesVoluntary Market Compared to Assigned Risk Pool 6.78B 449M 450M 2.89B 217M .97B

  15. NCCI Assigned Risk Pool Statistics 2002Percent of Assigned Risk Pool Policies Compared to Voluntary Market

  16. NCCI Assigned Risk Pool Statistics 2002Minimum Premiums • Amount charged if true premium falls below a predetermined dollar amount • Like a minimum shipping charge when you order goods by telephone or on the Internet • Workers’ compensation insurance companies establish and file a minimum premium amount

  17. NCCI Assigned Risk Pool States 2002Minimum Premiums in Assigned Risk Pool *Arizona has a competitive State Fund – only 0.4% of market in Assigned Risk Pool **Idaho has a competitive State Fund – only 1% of market in Assigned Risk Pool.

  18. NCCI Assigned Risk Pool Statistics 2002Minimum Premiums • In Montana private carriers minimum premium is typically $750 • Premium $1 - $570 • Policy Expense Constant $180 Charged Minimum Premium $750 • State Fund has minimum premium of $300 • Premium $1 - $185 • Policy Expense Constant $115 Charged Minimum Premium $300 • State Fund premium between $300 and $750 • Premium $186 - $635 • Policy Expense Constant $115 Charged Premium $301 - $750

  19. NCCI Assigned Risk Pool States 2002Minimum Premiums

  20. NCCI Assigned Risk Pool States 2002Minimum Premiums

  21. Demographics of the Montana Market 2002Montana Policyholders

  22. In Conclusion • Approximately 7,000 employers who are placed in the Assigned Risk Pool may see increases based on Assigned Risk Pool rates • Anticipate increased premium to cause more employers to go without workers’ compensation insurance • Anticipate increased claims to Uninsured Employers Fund

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