FloridaUpdate to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual...

© Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved.

Florida

January 1, 2018 Workers Compensation Rate FilingActuarial Analysis

Jay Rosen, FCAS, MAAADirector and Senior Actuary


Current NCCI Voluntary Market Loss Cost/Rate Level Changes (%)

Excludes Law-Only Filings

-16

.3

-16

.2 -14

.0

-13

.3

-13

.0 -10

.9

-10

.7

-10

.3 -9.8

-9.4 -8

.7

-8.4 -7.9

-7.8

-7.8

-7.6 -6

.4

-6.1

-5.8 -4

.6

-4.5

-4.3 -3

.0

-1.0 -0.5

-14

.1

-13

.9 -12

.8

-12

.7

-12

.6 -11

.3

-9.3 -7

.9

-7.6 -6

.2

-3.0 -1

.7

1.1

OK NM CT OR AL NH MD IN CO TN NC IL NV WV LA UT FL IA AR AK VT MT TX KS NE AZ SC MS ID KY RI ME DC MO HI SD GA VA

Approved Pending

2

Reflects the most recent experience filing in each jurisdictionDue to the timing of the individual loss cost/rate filings, the figures shown may include changes from prior filing seasons

© Copyright 2017 National Council on Compensation Insurance, Inc. All Rights Reserved. 3

Component Impact

Change in Experience, Trend and Benefits –7.8%

Change in Production and General Expenses 0.0%

Change in Taxes and Assessments –0.4%

Change in the Profit and Contingency Provision –1.0%

Change in Loss-Based Expenses –0.5%

Offset for the Change in the Expense Constant +0.3%

Proposed Overall Average Rate Level Change –9.3%

FloridaJanuary 1, 2018 Rate Filing


Component Impact








Experience, Trend and Benefits


Filing Methodology

5

Calculation Methodology

Experience Period Most recent two full policy years

Loss Development Average of the results produced by the paid and paid plus case loss aggregations

Three-year average link ratios


The most recent two full policy years of financial data is used as the filing’s experience period

Filing Methodology—Experience Period

Policy

Year

2014

1/1/14 1/1/15 12/31/16 1/1/191/1/181/1/16 12/31/19

Policy

Year

2018

Policy

Year

2015

Financial data valued

as of year-end 2016

Supreme Court decisions

effective April and June 2016

6


Filing Methodology

7

Calculation Methodology

Trend Reviewed historical changes in:- Claim frequency and severity- Loss ratios

Indemnity: Selected –3.0% per yearMedical: Selected –0.5% per year

The selected trend factors recognize the current high degree of uncertainty associated with financial data loss experience that has yet to fully emerge in the post-Castellanos environment


Florida Lost-Time Claim Frequency(Frequency per Million on On-Leveled, Wage-Adjusted Premium)

8

12

14

16

18

20

22

24

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Policy Year

Florida claim frequency hasfallen 19% since 2011

Based on financial data


Florida Average Claim Severity ($ ‘000s)

9

10

15

20

25

30

35

40

45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Policy Year

The lost-time claim severity figures are in excess of wage trendBased on an average of paid and paid plus case financial data at current benefit level and developed to ultimate

Medical

Indemnity


Florida Indemnity and Medical Loss Ratios

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2018Projected

Policy Year

10

Medical

Indemnity

Based on an average of paid and paid plus case financial data at current benefit level and developed to ultimate


Florida Indemnity and Medical Loss Ratios

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2018Projected

Policy Year

11

Medical

Indemnity

Based on an average of paid and paid plus case financial data at current benefit level and developed to ultimate


Update to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual

Effective July 1, 2017

Component Impact

Physician –0.2%

Hospital Outpatient –0.1%

Impact on Medical Costs –0.1%

Overall Impact on WC System Costs –0.1%

12

The estimated impact is based on data provided by the Florida Division of Workers’ Compensation


Component Impact








Florida Expense Provisions


Component Impact










Expense Provisions—Profit and Contingency

15

Provision Methodology

Profit andContingency(P&C)

Based on the results of NCCI’s Internal Rate of Return (IRR) model:

“Dynamic” estimate: 1.38%

Selected provision: 2.0%

“Static” estimate: 2.80%

• The selected provision reflects the merits of the two individual approaches

• It is expected that selecting a P&C provision approximately midway between the two estimates will provide year-to-year stability in this filing component


Component Impact










Component Current Proposed

Loss Adjustment Expense (LAE) 21.3% 20.7%

Expense Constant (EC) $200 $160

• LAE includes costs associated with the handling of WC claims

• The EC, together with the expense provision included in the manual rate, provide for insurer expenses

• The proposed reduction in the EC is intended to affect a more equitable distribution of premium and expenses across risk sizes and is being implemented in a premium-neutral fashion

Expense Provisions—LAE and Expense Constant


Component Impact








FloridaJanuary 1, 2018 Rate Filing

FloridaUpdate to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual...

Documents

Transcript of FloridaUpdate to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual...