Rate Filings

The ICRB submits annual rate filings to the Indiana Department of Insurance each January first. In addition, because of benefit level increases effective July first as passed by the legislature, the ICRB may submit a “law only” rate filing to reflect the impact of the benefit increase on advisory rates. Listed below are summaries of recent filings

• Implied Loss Cost Multiplier (LCM): 1.359
• Executive officer weekly payroll:
  • Minimum increased from $307 to $319 ($16,588 annually)
  • Maximum remains the same at $2,500 ($130,000 annually)
• Sole proprietor, partner, LLC member who elect coverage:
  • Fixed annual payroll increased from $41,800 to $43,400
• Expense constant the same at $250
• Medical/Indemnity split: 65%/35%
• Source: Tech Supp Exhibit I-A, lines 8 & 20, 2001& 2002 years
  
  

Loss Ratios

Indemnity	Medical	Total
20%	41%	61%

Policy year 2002 developed to ultimate at designated statistical reporting level
Source: Tech Supp Appendix A-III, Section B

Target Cost Ratio	Overhead	Total
73.6%	26.4%	100.0%

For 2005, the target cost ratio is 73.6%. The target cost ratio gives a 0% change indication from the previous year to determine if rates are adequate on a standard premium basis. The target cost ratio is the portion of premium that funds loss and loss adjustment expenses (LAE). The complement of that (26.4%) is for funding overhead provisions: production expenses, general expenses, taxes, and profit & contingencies.

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January 1, 2004
(advisory rate filing deemed approved as of 11/16/2003)


Full filing of advisory loss costs, advisory rates and rating values for both voluntary and assigned risk business effective January 1, 2004 for new and renewal policies.

Overall premium level change: -1.8%.
Formula:  (1-0.02)*(1+0.002)-1

Overall rate level change: -1.8%.


Components of Premium Level Change Experience -2.0% Trend 0.0% Benefits 0.0% Loss Adjustment Expense 0.0% General Expense +0.2% Expense Constant Offset 0.0%

Source: Tech Supplement, Appendix B-II(5)

Average Change by Industry Group Range of Swing Limits from Previous Rates

Manufacturing -2.9% +22 to -28% Contracting -4.1% +21 to -29% Office -0.2% +25 to -25% Goods & Services +0.8% +26 to -24% Miscellaneous -1.8% +23 to -27%

Other Changes:

• Loss Cost Multiplier (LCM): 1.348
• Executive officer weekly payroll:
  • Minimum increased from $298 to $307 ($15,964 annually)
  • Maximum the increased from $2,400 to $2,500 ($130,000 annually)
• Sole proprietor, partner, LLC member who elect coverage:
  • Fixed annual payroll increased from $40,500 to $41,800
• Expense constant the same at $250
• Medical/Indemnity split: 61%/39%

Source: Tech Supp Exhibit I-A, lines 8 & 18, 2000 & 2001 years

Loss Ratios

Indemnity	Medical	Total
21%	35%	57%

Policy year 2001 developed to ultimate at designated statistical reporting level
Source: Tech Supp Appendix A-III, Section B

Target Cost Ratio	Overhead	Total
74.2%	25.8%	100.0%

For 2004, the target cost ratio is 74.2%. The target cost ratio gives a 0% change indication from the previous year to determine if rates are adequate on a standard premium basis. The target cost ratio is the portion of premium that funds loss and loss adjustment expenses (LAE). The complement of that (25.8%) is for funding overhead provisions: production expenses, general expenses, taxes, and profit & contingencies.

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January 1, 2003
(advisory rate filing deemed approved as of 12/03/2002)

Full filing of advisory loss costs, advisory rates and rating values for both voluntary and assigned risk business effective January 1, 2003 for new and renewal policies.

Overall premium level change: -1.9%.
Formula:  (1-0.036)*(1+0.01)*(1+0)*(1+0.005)*(1+0.002)-1

Overall rate level change: -2.2%.
Formula:  (1-0.036)*(1+0.01)*(1+0)*(1+.005)*(1+0.002)*(1-0.003)-1

Components of Premium Level Change Experience -3.6% Trend +1.0% Benefits 0.0% Loss Adjustment Expense +0.5% General Expense +0.2% Expense Constant Offset -0.3%

Source: Tech Supplement, Appendix B-II(5)

Average Change by Industry Group Range of Swing Limits from Previous Rates

Manufacturing -1.1% +24 to -26% Contracting -1.4% +24 to -26% Office +1.3% +26 to -24% Goods & Services -3.1% +22 to -28% Miscellaneous -6.1% +19 to -31%

Other Changes:

• Loss Cost Multiplier (LCM): 1.344
• Executive officer weekly payroll:
  • Minimum increased from $294 to $298 ($15,496 annually)
  • Maximum the same from $2,400 to $2,400 ($124,800 annually)
• Sole proprietor, partner, LLC member who elect coverage:
  • Fixed annual payroll increased from $40,100 to $40,500
• Expense constant increased from $240 to $250
• Medical/Indemnity split: 60%/40%

Source: Tech Supp Exhibit I, lines 11 & 22, 99 & 00 years

Loss Ratios

Indemnity	Medical	Total
0.217	0.357	0.574

Policy year 2000 developed to ultimate at designated statistical reporting level
Source: Tech Supp Appendix A-III, Section B

Target Cost Ratio	Overhead	Total
74.4%	25.6%	100.0%

For 2003, the target cost ratio is 74.4%. The target cost ratio gives a 0% change indication from the previous year to determine if rates are adequate on a standard premium basis. The target cost ratio is the portion of premium that funds loss and loss adjustment expenses (LAE). The complement of that (25.6%) is for funding overhead provisions: production expenses, general expenses, taxes, and profit & contingencies.

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January 1, 2002

Full filing of advisory loss costs, advisory rates and rating values for both voluntary and assigned risk business effective January 1, 2002 for new and renewal policies.

The overall premium level change and rate level change was -7.4%.

Percent Formula:  (1-0.049)*(1-0.024)*(1+0.004)*(1-0.014)*(1+0.007)-1

Components of Premium Level Change Experience -4.9% Trend -2.4% Benefits 0.4% Loss Adjustment Expense -1.4% General Expense 0.7%




Average Change by Industry Group Range of Swing Limits from Previous Rates

Manufacturing -6.1% +19 to -31% Contracting -6.4% +19 to -31% Office -8.3% +17 to -33% Goods & Services -8.2% +17 to -33% Miscellaneous -9.3% +16 to -34%

Other Changes:

• Loss Cost Multiplier (LCM): 1.347
• Executive officer weekly payroll:
  • Minimum increased from $282 to $294 ($15,288 annually)
  • Maximum increased from $2,300 to $2,400 ($124,800 annually)
• Sole proprietor, partner, LLC member who elect coverage:
  • fixed annual payroll increased from $38,500 to $40,100
• Expense Constant remains at $240
• Medical/Indemnity split: 62%/38%

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January 1, 2001

Full filing of advisory loss costs, advisory rates and rating values for both voluntary and assigned risk business effective January 1, 2001 for new and renewal policies. The overall premium level change and rate level change was +1.5%.

Changes effective January 1, 2001 are as follows:

Percent Formula:
Overall premium and rate level change: 1.5% (1-0.016)*(1+0.032)*(1-0.001)*(1+0.001)-1


Components of Premium Level Change Experience 1.5% Trend 0.0% Benefits 3.2% Loss Adjustment Expense -0.1% General Expense 0.1%




Average Change by Industry Group Range of Swing Limits from Previous Rates

Manufacturing 1.7% +27 to -23% Contracting -2.4% +23 to -27% Office 7.9% +33 to -17% Goods & Services 1.4% +26 to -24% Miscellaneous 2.5% +28 to -22%

Other changes:

• Executive officer weekly payroll: minimum increased from $275 to $282 ($14,664 annually) maximum increased from $2,200 to $2,300 ($119,600 annually)
• Sole proprietor, partner, LLC member who elect coverage: fixed annual payroll increased from $37,400 to $38,500
• Expense Constant increased from $230 to $240
• Medical/indemnity split: 62%/38%

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July 1, 2000

Law only filing for all business effective July 1, 2000 for new, renewal, and outstanding policies. The overall premium level change was +3.6%. The filing was made in response to two legislative changes effective July 1, 2000. Both Senate Bill 12(ss) and House Enrolled Act 1050 contain benefit increases which impact rates at 0.3% and 3.3% respectively, for a total of 3.6%. The fourth and last stage of SB12(ss), enacted in special session on May 29, 1997, provided for an increase in the average weekly wage maximum. The first stage of HEA1050 enacted in March 2000 provided for increased benefits for permanent partial impairments


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January 1, 2000

Full filing of advisory loss costs, advisory rates and rating values for both voluntary and assigned risk business effective January 1, 2000 for new and renewal policies. The overall premium level change was +0.1% and the overall rate level change was 0.0%.

Changes effective January 1, 2000 are as follows:

Percent Formula:
Overall premium level change: 0.1% (1-0.002)*(1+0.007)*(1-0.004)-1 Overall rate level change: 0.0% (1+0.001)*(1-0.001)

 

Components of Premium Level Change Experience, Trend, Benefits -0.2% Expense Change 0.7% Loss Based Expenses -0.4%

Additional component of rate level change: Offset for Change in Expense Constant -0.1%

Average Change by Industry Group Range of Swing Limits from Previous Rates

Manufacturing 1.2% +26 to -24% Contracting -0.3% +25 to -25% Office 3.5% +29 to -21% Goods & Services -2.5% +23 to -27% Miscellaneous 0.3% +25 to -25%

notes:

1. Percentages indicate the allocation of final premium dollar after premium discounts and expense constants.
2. 80.4% of the final premium dollar is used for benefit and loss adjustment expenses.

Other changes:

• Executive officer weekly payroll: minimum increased from $257 to $275 ($14,300 annually) maximum increased from $2,100 to $2,200 ($114,400 annually)
• Sole proprietor, partner, LLC member who elect coverage: fixed annual payroll increased from $35,100 to $37,400
• Expense Constant increased from $220 to $230
• Medical/indemnity split: 65%/35%