Comparison of Montana to Assigned Risk Pools in Other States Senate Bill 304 Study Committee...
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Transcript of Comparison of Montana to Assigned Risk Pools in Other States Senate Bill 304 Study Committee...
Comparison of Montana to Assigned Risk Pools in Other States
Senate Bill 304 Study CommitteeSenate Bill 304 Study CommitteeNovember 7, 2003November 7, 2003
Jerry Keck, AdministratorEmployment Relations DivisionMontana 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
0102030405060708090
Dol
lars
in M
illio
ns
Premium Size
0-$5,000 $5,000-$50,000 Over $50,000
15%
40%45%
Most analysis of the workers’ compensation market is by premium dollars
27M
72M81M
4
Demographics of the Montana Market 2002Policy Count
26,806
5,338542
0
5,000
10,000
15,000
20,000
25,000
30,000
Num
ber
of P
olic
ies
Premium Size
Policy Count
0-$5,000 $5,000-$50,000 Over $50,000
16.3%
82%
1.7%
5
Demographics of the Montana Market 2002Premium Dollars Compared to Policy Count
15.0%
82.0%
40.0%
16.3%
45.0%
1.7%0.0%
20.0%
40.0%
60.0%
80.0%
100.0%P
erce
nt
0-$5,000 $5,000-$50,000 Over $50,000
Premium Size
Premium Policy Count
27M
26,806
72M81M
5,338
542
6
18%
76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Employers Employees
US Bureau of Labor Statistics*For Montana
82%
24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Employers Employees
*Most current 1st quarter 2001
31K
72.6K6.6K
225K
Private Sector Number of Business Establishments and Employees
Employers with <10 Employees Employers with =>10 Employees
7
18%24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Montana US
US Bureau of Labor Statistics*Comparison of Montana to US
82%76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Montana US
*Most current 1st quarter 2001
Employers with <10 Employees Employers with =>10 Employees
Private Sector Number of Business Establishments and Employees
8
US Bureau of Labor Statistics*NCCI Assigned Risk Pool States
Illinois 69.1% Oregon 76.2%
Nevada 71.1% New Mexico 76.4%
Indiana 72.1% South Carolina 77.1%
Alabama 73.3% New Hampshire 77.1%
South Dakota 73.3% Connecticut 77.2%
Virginia 73.6% Vermont 77.8%
North Carolina 73.8% Alaska 77.8%
Kansas 74.9% Idaho 78.2%
Mississippi 74.9% Delaware 79.0%
Arizona 75.0% District of Columbia 79.1%
Georgia 75.1% New Jersey 79.2%
Iowa 75.1% Montana 82.5%
Arkansas 75.2%
Percentage of Employers with < 10 Employees
9
NCCI Assigned Risk Pool 2002States Included in the Pool
Alabama KansasAlaska Mississippi
*Arizona1 Nevada
Arkansas New Hampshire
Connecticut New Jersey
Delaware *New Mexico
District of Columbia North Carolina
Georgia *Oregon
*Idaho2 *South Carolina
Illinois South Dakota
Indiana Vermont
Iowa Virginia
*These states have a competitive State Fund1Arizona 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
$0
$100
$200
$300
$400
$500
Dol
lars
in M
illio
ns
Premium Size
0-$5,000 $5,000-$50,000 Over $50,000
19.5%
40.2% 40.3%
217M
449M 450M
11
NCCI Assigned Risk Pool Statistics 2002Policy Count of 24 NCCI States
184,292
32,0033,812
0
50,000
100,000
150,000
200,000
Num
ber
of P
olic
ies
Premium Size
Policy Count
0-$5,000 $5,000-$50,000 Over $50,000
83.7%
14.6%1.7%
12
NCCI Assigned Risk Pool Statistics 2002Premium Dollars Compared to Policy Count of 24 NCCI States
19.5%
83.7%
40.2%
14.6%
40.3%
1.7%0.0%
20.0%
40.0%
60.0%
80.0%
100.0%P
erce
nt
0-$5,000 $5,000-$50,000 Over $50,000
Premium Size
Premium Policy Count
217M
449M 450M
184,292
32,003
3,812
13
Voluntary Market in 24 NCCI Assigned Risk Pool StatesPremium Dollars
$0
$2
$4
$6
$8
$10
Dol
lars
in B
illio
ns
Premium Size
0-$5,000 $5,000-$50,000 Over $50,000
9.1%
27.2%
63.7%
0.97B
2.89B
6.78B
14
Voluntary Market in 24 NCCI Assigned Risk Pool StatesVoluntary Market Compared to Assigned Risk Pool
19.5%9.1%
40.2%
27.2%
40.3%
63.7%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%Pe
rcen
t
0-$5,000 $5,000-$50,000 Over $50,000
Premium Size
Assigned Risk Pool Voluntary Market
217M
449M 450M
.97B
2.89B
6.78B
15
NCCI Assigned Risk Pool Statistics 2002Percent of Assigned Risk Pool Policies Compared to Voluntary Market
77.8%
22.2%
85.1%
14.9%
88.0%
12.0%0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
<$5,000 $5,000-$50,000 Over $50,000
Policy Count
Voluntary Market Assigned Risk Pool
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
Alabama $750 Kansas $750
Alaska $500 Michigan $750
*Arizona $750 Nevada $750
Arkansas $750 New Hampshire $750
Connecticut $750 New Mexico $750
District of Columbia $750 North Carolina $850
Georgia $750 Oregon $500
**Idaho $300 South Dakota $800
Illinois $750 Vermont $750
Iowa $550 Virginia $750
*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
$115Charged Premium $301 -
$750
19
NCCI Assigned Risk Pool States 2002Minimum Premiums
State Fund Clerical Class Code Rate X Payroll(8810 class code rate = .77 X $20,000)
$154
Policy Expense Constant 115
Total $269
Montana State Fund Minimum Premium $300
Private Carrier Clerical Class Code Rate X Payroll(8810 class code rate = .74 X $20,000)
$148
Private Carrier Expense Constant 180
Total $328
Private Carrier Minimum $750
20
NCCI Assigned Risk Pool States 2002Minimum Premiums
State Fund Outside Sales Class Code Rate X Payroll(8742 class code rate = .86 X $45,946)
$395
Policy Expense Constant 115
Montana State Fund Premium $510
Private Carrier Outside Sales Class Code Rate X Payroll(8742 class code rate = 1.31 X $45,946)
$601
Policy Expense Constant 180
Private Carrier Premium $781
21
Demographics of the Montana Market 2002Montana Policyholders
# of Policies# of Policies % of Employers% of Employers
MSF $300 Minimum Premium 5,180 15.8%
MSF Premium $300 – $750 6,579 20%
Policyholders with Premium under $5,000Likely to be in Assigned Risk Pool (26,806 X 22.2%) 5,951 18%
Policyholders with Premiums $5,000 - $50,000Likely to be in Assigned Risk Pool (5,338 X 14.9%) 795 2%
Policyholders with Premiums Over $50,000Likely to be in Assigned Risk Pool (542 X 12%) 65 2%
Total Number of Policies in Montana Market 32,686