Effect of competitive rating in Indiana broken out by three types of rate departures: policyholder dividends, schedule rating, and carrier deviations.
Pursuant to Indiana Code, this document is an ongoing report on the effect of competitive rating in Indiana.
IC 27-7-2-20 (b)”…The bureau shall annually submit data concerning these deviations to the department. Upon receipt, the department shall evaluate the data and prepare a report concerning the effect of competitive rating in Indiana. The department shall make the report available not later than October 31 of each year.”.
The “Competition” chart (see below) contains information on three types of rate departures: policyholder dividends, schedule rating, and carrier deviations from bureau advisory loss costs and rates, as well as the combined effects of each rate departure component over the years.
Background Information
Indiana has a competitive rating law for workers compensation, enacted January 1, 1990. This means the Bureau files “advisory” rates for voluntary business with the Department of Insurance. “Advisory” means that a carrier has a choice: it can use the advisory rates, or file its own rates with the Department. If a carrier files its own rates it can use the “loss cost” rates and add in a factor for its own expenses, usually called the “loss cost multiplier.” This flexibility creates competition. Carriers can more readily reflect the true cost of operating, reflect their own expense structure, and reflect their own expectation of profit. This allows a competitive market to decide who will be more successful than someone else. A carrier that is more efficient and keeps its expenses down, can use lower rates than its competitors and attract more customers.
Pursuant to Indiana Code, this document is an ongoing report on the effect of competitive rating in Indiana.
IC 27-7-2-20 (b)
“…The bureau shall annually submit data concerning these deviations to the department. Upon receipt, the department shall evaluate the data and prepare a report concerning the effect of competitive rating in Indiana. The department shall make the report available not later than October 31 of each year.”.
The “Competition” chart (see below) contains information on three types of rate departures: policyholder dividends, schedule rating, and carrier deviations from bureau advisory loss costs and rates, as well as the combined effects of each rate departure component over the years.
Background Information
Indiana has a competitive rating law for workers compensation, enacted January 1, 1990. This means the Bureau files “advisory” rates for voluntary business with the Department of Insurance. “Advisory” means that a carrier has a choice: it can use the advisory rates, or file its own rates with the Department. If a carrier files its own rates it can use the “loss cost” rates and add in a factor for its own expenses, usually called the “loss cost multiplier.” This flexibility creates competition. Carriers can more readily reflect the true cost of operating, reflect their own expense structure, and reflect their own expectation of profit. This allows a competitive market to decide who will be more successful than someone else. A carrier that is more efficient and keeps its expenses down, can use lower rates than its competitors and attract more customers.
Competitive Rating in Indiana
| Rate Departures (percentage) | ||||
| Policy Year | Loss Cost / Rate | Schedule Rating | Dividends | Total Departure |
|---|---|---|---|---|
| 90 | -0.2 | -1.2 | -2.4 | -3.8 |
| 91 | -0.3 | -2.8 | -1.9 | -5.0 |
| 92 | -0.9 | -2.8 | -2.6 | -6.3 |
| 93 | -0.5 | -4.2 | -1.8 | -6.4 |
| 94 | -0.5 | -6.8 | -1.1 | -8.4 |
| 95 | -0.3 | -9.1 | -1.7 | -11.1 |
| 96 | -0.5 | -12.7 | -1.7 | -14.8 |
| 97 | -1.2 | -13.1 | -1.2 | -15.3 |
| 98 | -1.7 | -16.9 | -1.1 | -19.4 |
| 99 | -1.6 | -19.2 | -1.9 | -22.6 |
| 00 | -0.8 | -13.6 | -1.4 | -15.7 |
| 01 | -0.4 | -8.4 | -1.1 | -9.9 |
| 02 | 4.7 | -3.0 | -0.7 | 1.0 |
| 03 | 6.8 | -2.4 | -0.6 | 3.7 |
| 04 | 9.1 | -2.5 | -0.3 | 6.3 |
| 05 | 5.1 | -4.5 | -0.5 | 0.1 |
| 06 | 2.5 | -7.5 | -0.2 | -5.3 |
| 07 | 1.6 | -10.2 | -0.3 | -9.0 |
| 08 | -0.6 | -12.0 | -0.3 | -12.9 |
| 09 | 0.5 | -11.5 | -0.3 | -11.3 |
| 10 | 1.4 | -12.2 | -0.2 | -11.0 |
| 11 | 2.1 | -11.5 | -0.2 | -9.6 |
| 12 | 3.6 | -8.1 | -0.2 | -4.7 |
| 13 | 4.2 | -6.5 | -0.2 | -2.5 |
| 14 | 9.0 | -5.2 | -0.2 | 2.6 |
| 15 | 8.4 | -4.8 | -0.2 | 3.4 |
| 16 | 11.1 | -7.6 | -0.2 | 3.3 |
| 17 | 13.3 | -8.1 | -0.2 | 5.0 |
| 18 | 16.0 | -7.0 | -.02 | 9.0 |
| 19 | 16.11 | -5.6 | -.30 | 10.2 |
| 20 | 17.0 | -5.1 | -.02 | 11.7 |
| 21 | 15.8 | -5.1 | -0.2 | 10.5 |
| 22 | 10.7 | -5.6 | -.02 | 4.9 |
