Alabama - NCCI Holdings Inc. · Claims per $1M Pure Premium, Private Carriers and State Funds—NCCI States 2010 and 2011 adjusted primarily for significant changes in audit activity

© Copyright 2019 National Council on Compensation Insurance, Inc. All Rights Reserved.

AlabamaSeptember 18, 2019

[email protected] 561-945-4517


© Copyright 2019 National Council on Compensation Insurance, Inc. All Rights Reserved. 2

Agenda

Steve Garrett, Director, AL Workers' Compensation Division

Our Stories Video

Delivering Modernization

Countrywide Workers Compensation System

Alabama Workers Compensation System

Alabama Residual Market

Legislative Update

Medical Data

Back to Work Video


Steve Garrett, DirectorAlabama Workers’ Compensation Division


Our Stories Video



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Others• Access


Find It on ncci.com/INSIGHTS


Countrywide Workers Compensation System


Countrywide Workers Compensation (WC) System—An Overview

Net written premium increased in the most recent year

The combined ratio has continued to show favorable results

Lost-time claim frequency declined again

Lost-time claim severity increased modestly for both indemnity and medical

11© Copyright 2019 National Council on Compensation Insurance, Inc. All Rights Reserved.

Net Written PremiumPrivate Carriers and State Funds

37.8 39.843.2

47.845.0

48.6

10

20

30

40

50

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18pCalendar Year

p PreliminarySource: NAIC’s Annual Statement data; includes state insurance fund data for the following states: AZ, CA, CO, HI, ID, KY, LA, MD, MO, MT, NM, OK, OR, RI, TX, and UTEach calendar year total for state funds includes all funds operating as a state fund in that year

$ Billions


-0.3%

3.1%

0.8%

-8.9%

5.3%

12

Direct Written Premium Change by ComponentPrivate Carriers—NCCI States

Sources: Direct Written Premium Change: NAIC’s Annual Statement Statutory Page 14 for all states where NCCI provides ratemaking servicesComponents: NCCI’s Policy data

2017 vs. 2018

Payroll

Loss Cost and Mix

Carrier Discounting

Other Factors

Change in Direct Written Premium


0% 1% 2% 3% 4% 5%

Prof. & Business Services

Trade, Transportation, & Utilities

Education & Health Services

Manufacturing

Financial Activities

Construction

Leisure & Hospitality

All Other

0% 1% 2% 3% 4% 5%

13

Drivers of Changes in PayrollForecast Change 2017–2018

Sources: Moody’s Analytics and NCCI

Payroll 5.3%

Wage Rate 3.3% Employment 1.9%


P PreliminarySource: NAIC’s Annual Statement Statutory Page 14Values reflect changes in average premium levels between years, based on approved changes in advisory rates, loss costs, assigned risk rates, and rating values, as of 7/26/2019IN and NC are filed in cooperation with state rating bureaus

Approved Changes in Bureau Premium LevelWeighted by Effective Date—NCCI States

Percent

-9.7 -9.9-10

-5

0

5

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19p

Calendar Year


Impact of Discounting on PremiumPrivate Carriers—NCCI States

p PreliminarySources: NAIC’s Annual Statement Statutory Page 14 and NCCI’s Financial Call data Rate/loss cost departure reflects carrier departure from NCCI rate level, which excludes a profit and contingency provision and expense constantBased on data for all states where NCCI provides ratemaking services, excluding TX

1.3

-25

-15

-5

5

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18pPolicy Year

Percent


Combined Ratio—Underwriting Gain AchievedPrivate Carriers

p PreliminarySource: NAIC’s Annual Statement data

Percent

10089.3

83

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18p

Calendar Year


Combined Ratio by ComponentPrivate Carriers

p PreliminarySource: NAIC’s Annual Statement data

49 43

13 13

26 26

2 2

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18p

Loss Ratio

Loss Adjustment Expense (LAE) Ratio

Underwriting Expense Ratio

Calendar Year

Dividends

Percent


Change in Lost-Time Claim Frequency Claims per $1M Pure Premium, Private Carriers and State Funds—NCCI States

2010 and 2011 adjusted primarily for significant changes in audit activityp Preliminary, based on data valued as of 12/31/2018Source: NCCI’s Financial Call data, developed to ultimate, premium adjusted to current wage and voluntary pure premium level, excludes high-deductible policies; based on data through 12/31/2017Values displayed reflect the methodology underlying the most recent rate/loss cost filingIncludes all states where NCCI provides ratemaking services; NV is excluded through 2001, TX is excluded through 2006, and WV is excluded through 2011

-4.8

-1

-10

-5

0

5

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18pAccident Year

Average Annual Change: –3.9%(1998–2017)

Percent


Average Indemnity Claim SeverityPrivate Carriers and State Funds—NCCI States

p Preliminary, based on data valued as of 12/31/2018Source: NCCI’s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2017Values displayed reflect the methodology underlying the most recent rate/loss cost filingIncludes all states where NCCI provides ratemaking services; WV is excluded prior to 2008; NV and TX are excluded prior to 2004

23.9 24.6

4.4% 3%

5

10

15

20

25

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18pAccident Year

Severity($ Thousands)


Average Medical Lost-Time Claim SeverityPrivate Carriers and State Funds—NCCI States

p Preliminary, based on data valued as of 12/31/2018Source: NCCI’s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2017Values displayed reflect the methodology underlying the most recent rate/loss cost filingIncludes all states where NCCI provides ratemaking services; WV is excluded prior to 2008; NV and TX are excluded prior to 2004

28.7 28.9

4.1% 1%

5

10

15

20

25

30

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p 18pAccident Year

Severity($ Thousands)


Alabama Workers Compensation System


Alabama Premium VolumeDirect Written Premium in $ Millions

Source: NAIC’s Annual Statement data

352334

0

100

200

300

400

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Calendar Year


Change in Average Weekly WagesWage Growth Is Slightly Above the National Average

Year-over-year percentage change; wages are for Total Private IndustryFrequency of observation: quarterly; 2016 Q1–2019 Q1Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody’s Analytics, and NCCI

+6.2%

+3.8%

+1.9%

+7.0%

+3.7%

+1.5%

2017 Q1 2018 Q1 2019 Q1

Alabama United States


Change in Private EmploymentPrivate Employment Growth Is About Average

Year-over-year percentage change; employment is for Total Private IndustryFrequency of observation: quarterly; 2016 Q1–2019 Q1 Sources: US Bureau of Labor Statistics, Moody’s Analytics, and NCCI

+1.3%+1.2%

+2.0%

+1.6%+1.8%

+2.0%

2017 Q1 2018 Q1 2019 Q1



Private Industry Payroll Growth DecompositionPayroll Growth Is Slightly Above the National Average

AWW = Average Weekly Wage2019 Q1 year-over-year percentage changeSources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody’s Analytics, and NCCI

+2.0% +2.0%

+1.9%+1.5%

+3.9%

+3.5%

Employment

AWW

Payroll



–5% 0 +5% +10%

Payroll Growth–5% 0 +5% +10%

AWW Growth

26

Alabama’s Payroll Growth Decomposition by Sector

AWW = Average Weekly Wage2019 Q1 year-over-year percentage change; sectors are in descending order by the volume of state payroll amountsSources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody’s Analytics, and NCCI

–5% 0 +5% +10%

Government

Trade, transportation, andutilities

Manufacturing

Professional and businessservices

Education and health services

Financial activities

Construction

Leisure and hospitality

Other services

Information

Employment Growth ≈+


Impact of Discounting on Workers Compensation Premium in Alabama

p Preliminary Based on data through 12/31/2018

6.7

-10

-5

0

5

10

04 05 06 07 08 09 10 11 12 13 14 15 16 17 18p

Policy Year


Alabama Combined Ratios

Sources: NCCI’s financial data through 12/31/2018 and NAIC’s Annual Statement data

93100

100

2014 2015 2016 2017 2018

Accident Year


Alabama Change in Claim FrequencyPercent Change in Lost-Time Claims, per $ Million of On-Leveled Premium

Based on NCCI’s financial data through 12/31/2018, on-leveled and developed to ultimate, premium adjusted to common wage level

0.9

-0.3

-15

-10

-5

0

5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Policy Year


21.1 20.7

+11.3% -1.6%

0

10

20

30

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Policy Year

30

Alabama Average Indemnity Claim SeverityLost-Time Claim Severity in $ Thousands

Based on NCCI’s financial data through 12/31/2018, on-leveled and developed to ultimate


47.6 49.2

+18.5% +3.4%

0

20

40

60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Policy Year

31

Alabama Average Medical Claim SeverityLost-Time Claim Severity in $ Thousands

Based on NCCI’s financial data through 12/31/2018, on-leveled and developed to ultimate


-8.2%

-12.1%

-13.9%

-6.4%

-3.4%

-8.2%

-13.6%

-16.2%

-6.4%

-11.5%

3/1/2016 3/1/2017 3/1/2018 3/1/2019 3/1/2020*

32

Alabama Filing ActivityVoluntary Loss Cost and Assigned Risk Rate Changes

*Pending


Alabama March 1, 2020 Loss Cost Filing

Change in Experience –7.3%

Change in Trend +3.7%

Change in Benefits +0.3%

Offset for the Change in the Loss Cost Differential +0.4%

Change in Loss-Based Expenses –0.2%

Overall Loss Cost Level Change –3.4%


Alabama March 1, 2020 FilingAverage Changes by Industry Group

-3.6%

-6.7%

-1.4%-1.8%

-4.0%-3.4%

Manufacturing Contracting Office & Clerical Goods & Services Miscellaneous Overall


Reflects the most recent experience filing in each jurisdiction as of 9/6/2019 Due to the timing of the individual loss cost/rate filings, the figures shown may include changes from prior filing seasons

Current NCCI Voluntary Market Loss Cost/Rate Level ChangesExcludes Law-Only Filings

-3.4

-17.2

-1.5

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

Approved Pending

35

(Pending)


Workers Compensation Underwriting Cycle Video


Alabama Residual Market


Plan DataIncludes 22 NCCI Plan Administration States

AlabamaAlaskaArizonaArkansasConnecticutDCGeorgiaIdahoIllinoisIowaKansas

MississippiNevadaNew HampshireNew MexicoOregonSouth CarolinaSouth DakotaTennesseeVermontVirginiaWest Virginia


Assigned Risk Plan Market Share Percentage by StateAs of 12/31/2018

Market share percentage is from NCCI’s 2018 Residual Market Management Summary

3.3

AK AR VT TN KS NH NV GA VA OR SC CT AZ DC IA IL SD WV MS NM AL ID


Alabama Residual Market Share Compared to All Plan States Market SharePlan Premium as a Percentage of Direct Written Premium

4.54.0

2.73.0

3.3

6.76.3 6.1 6.0

5.7

2014 2015 2016 2017 2018Calendar Year

Market share percentage is from NCCI’s 2018 Residual Market Management Summary


Alabama Residual Market Plan PremiumAs of 12/31/2018

Premium data is on a policy year basis as reported to NCCI, for policies effective from January 1, 2018, to December 31, 2018, including prorated cancellations, with all policies’ premium associated to the dominant state

11.8 11.4

9.48.5

9.3

2014 2015 2016 2017 2018

Policy Year

41


Alabama Residual Market Policy CountsAs of 12/31/2018

Policy data is on a policy year basis as reported to NCCI, for policies effective from January 1, 2018, to December 31, 2018, including prorated cancellations, with all policies’ premium associated to the dominant state

1,682

1,600 1,614

1,634

1,706

2014 2015 2016 2017 2018

Policy Year


Alabama Residual Market Policy Information

Premium and policy data is on a policy year basis as reported to NCCI, for policies effective from January 1, 2018, to December 31, 2018, including prorated cancellations, with all policies’ premium associated to the dominant state

43$5,422Average Policy Size

(Under $2,500)

($10K to $49,999)

Policy Premium


Legislative Update


Legislative Overview | NationalAs of June 30, 2019

668All jurisdictions/federal WC-related bills tracked by NCCI

415Bills in NCCI jurisdictions

84Enacted (includes all jurisdictions/federal)

45


Legislative Overview | WC Bills Introduced

46

CA

ORID

WA

MT

NV

AK

UT

AZ

CO

NM

WY

TX

OK

KS

NE

SD

NDMN

IA

MO

AR

LA

IL

WIMI

INOH

MS AL GA

FL

TN

KY

SC

NC

VAWV

PA

NY

NJ

ME

VTNH

MD

DE

CTRI

DC

MA

HI

0–10 Bills Introduced



More Than 30 Bills

Introduced

As of June 30, 2019


Legislative Overview | National Bill Trends

122 First Responder Bills

54 Reimbursement/Fee Schedule Bills

46 Court/Legal Issue Bills

45 Indemnity Benefit Bills

42 Compliance-Related Bills

47

As of June 30, 2019


NCCI’s Engagement at the Federal Level

48

NCCI

US Department

of Labor (USDOL)

US Department

of the Treasury

.

.

48


Issue Spotlight: Terrorism Risk Insurance Program

Background

Unique impact of terrorism peril on workers compensation

Current status of Terrorism Risk Insurance Program Reauthorization Act (TRIPRA)of 2015 Absent Congressional action,

TRIPRA expires on 12/31/2020

Reauthorization activities Federal Insurance Office (FIO) NCCI Industry Other stakeholders


Hot Topics

Legalization of Marijuana

Prescription Drugs

Single Payer

Air Ambulances

50


Available on ncci.com


Medical Data


Distribution of Medical PaymentsAlabama vs. Countrywide

3%

10%

19%

5%

13%

24%

26%

4%

8%

10%

7%

13%

19%

39%Physicians

Hospital Outpatient

Hospital Inpatient

Ambulatory Surgical Centers

Drugs

DME, Supplies, and Implants

Other

53

Countrywide includes data from the following states: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NJ, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, WI, and WV


Distribution of Physician Payments by AMA Service CategoriesAlabama vs. Countrywide


3%

4%

5%

12%

16%

27%

33%

1%

3%

4%

9%

23%

25%

35%Medicine

Surgery

Evaluation and Management

Radiology

Anesthesia

Other

Pathology


Hospital Inpatient ServicesAlabama vs. Countrywide


$29,058 $29,876

Paid Amount per Stay

23

18

Stays per 1,000 Active Claims


Hospital Outpatient Services—SurgicalAlabama vs. Countrywide


$6,923

$4,521

Paid Amount per Visit

105

88

Visits per 1,000 Active Claims


Hospital Outpatient Services—NonsurgicalAlabama vs. Countrywide


$1,026

$493


601

887



Ambulatory Surgical Centers ServicesAlabama vs. Countrywide


$3,483

$4,420


75

67



Top 10 Workers Compensation Drugs by Amount Paid

*PPU = Price per UnitCountrywide includes data from the following states: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NJ, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, WI, and WV

Average PPU*Drug Name AL CW Alabama Paid Share

Lyrica® $6.96 $7.10

Gabapentin $1.26 $1.18

Oxycontin® $9.65 $8.84

Oxycodone HCl-Acetaminophen $1.89 $1.70

Hydrocodone Bitartrate-Acetaminophen $0.60 $0.58

Celecoxib $4.86 $5.09

Meloxicam $2.75 $3.25

Lidocaine $6.56 $7.04

Duloxetine HCl $5.06 $5.18

Tizanidine HCl $1.24 $1.24

10.3%

4.3%

4.0%

3.2%

3.2%

3.0%

2.4%

2.4%

2.4%

2.0%


Top 10 Workers Compensation Drugs by Prescription Counts

*PPU = Price per UnitCountrywide includes data from the following states: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NJ, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, WI, and WV

Average PPU*

Drug Name AL CW Alabama Prescription ShareHydrocodone Bitartrate-Acetaminophen $0.60 $0.58

Gabapentin $1.26 $1.18

Tramadol HCl $0.82 $1.14

Oxycodone HCl-Acetaminophen $1.89 $1.70

Meloxicam $2.75 $3.25

Tizanidine HCl $1.24 $1.24

Cyclobenzaprine HCl $0.96 $1.43

Lyrica® $6.96 $7.10

Methocarbamol $0.43 $0.41

Celecoxib $4.86 $5.09

12.6%

5.7%

4.5%

4.1%

4.0%

3.7%

3.6%

3.5%

2.6%

2.3%


Distribution of Drugs by Brand Name and Generic


51% 56%

49% 44%

Alabama Countrywide

Brand

Generic

85% 85%

15% 15%

Alabama Countrywide

Paid Scripts


Distribution of Drugs by Opioid and Nonopioid


30% 27%

70% 73%

Alabama Countrywide

26% 24%

74% 76%

Alabama Countrywide

Nonopioid

Opioid

Paid Scripts


Top Diagnosis Groups by Amount Paid

Payments are based on claims with dates of injury between January 1, 2016, and December 31, 2016, and include all reported services provided for those claims through December 31, 2017Countrywide includes data from the following states: AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NJ, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, WI, and WV

Average Amount Paid Per ClaimDiagnosis Group Paid Share Alabama CountrywideRotator cuff tear 6.0% $22,422 $19,053

Low back pain 4.2% $2,165 $2,414

Fracture of lower leg, including ankle 4.0% $27,522 $17,920

Lumbosacral intervertebral disc disorders 3.6% $19,850 $13,571

Other joint disorder, not elsewhere classified 3.3% $3,873 $5,028

Knee internal derangement—meniscus injury 3.0% $16,435 $13,042

Open wound of wrist, hand, and fingers 2.8% $1,173 $1,051

Shoulder impingement syndrome 2.8% $28,094 $17,088

Minor hand/wrist injuries 2.6% $1,197 $1,348

Neck pain 2.5% $3,295 $2,811


Information From the Medical Data Call

For information in this section, the source is NCCI’s Medical Data Call for Service Year 2017 as contained in the 2018 Medical Data Report and the 2018 Opioid Utilization Supplement for Alabama

The availability of detailed medical data on workers compensation claims is essential for the pricing of proposed state legislation, assessing impacts of changes to medical fee schedules, and conducting research


Kids’ Chance of Alabama


Kids’ Chance of AlabamaAdministered by the Alabama Law Foundation, Inc.

MailPO Box 4129

Montgomery, AL 36103

Phone334-781-6343

[email protected]

We ensure access to justice for thousands of low-income families facing life-changing legal issues.

66


Back to Work Video


AlabamaSeptember 18, 2019




Supplemental Information


Total Benefit Costs in Alabama Indemnity vs. Medical

Regional states are FL, GA, MS, and TNBased on NCCI’s financial data

42%

36%

29%

58%

64%

71%


Alabama Loss RatiosIndemnity vs. Medical

Based on NCCI’s financial data through 12/31/2018 at current benefit level and developed to ultimate

0.33

0.79

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2010 2011 2012 2013 2014 2015 2016 2017

Policy Year


Alabama Claim FrequencyLost-Time Claims, per $ Million of On-Leveled Premium

Based on NCCI’s financial data through 12/31/2018, on-leveled and developed to ultimate, premium adjusted to common wage level

16.1

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Policy Year


Alabama Average Indemnity Claim SeverityAdjusted to Common Wage Level vs. Actual, in $ Thousands

Based on NCCI’s financial data through 12/31/2018 for lost-time claims at current benefit level and developed to ultimate

20.7

0

20

40

60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Policy Year


Alabama Average Medical Claim SeverityAdjusted to Common Wage Level vs. Actual, in $ Thousands

Based on NCCI’s financial data through 12/31/2018 for lost-time claims at current benefit level and developed to ultimate

49.2

0

20

40

60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Policy Year


Alabama Average Claim FrequencyLost-Time vs. Medical Only, per 100,000 Workers

Based on NCCI’s Statistical Plan data

2,869

3,199

2,762

2,675

3,343

3,078

2,952

617 2,252AL

FL

GA

MS

TN

Reg

CW


19.821.6

18.3

34.0

20.4

15.9

AL FL GA MS TN

76

Average Indemnity Claim Severity in the RegionPY 2015 vs. PY 2016, in $ Thousands

Based on NCCI’s financial data for lost-time claims at current benefit level and developed to ultimate, premium adjusted to common wage level


42.0

48.9

39.537.1

31.633.9

AL FL GA MS TN

77

Average Medical Claim Severity in the RegionPY 2015 vs. PY 2016, in $ Thousands

Based on NCCI’s financial data for lost-time claims at current benefit level and developed to ultimate, premium adjusted to common wage level


Alabama Distribution of Claims by Injury Type

Regional states are FL, GA, MS, and TNBased on NCCI’s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist

76%

75%

79%

15%

16%

17%

9%

9%

4%

Medical Only Temporary Total Permanent Partial Fatal & Permanent Total


Alabama Indemnity Loss Distribution by Injury Type


33%

46%

57%

56%

45%

39%

5%

6%

6%

3%

4%

Temporary Total Permanent Partial Permanent Total Fatal


Alabama Medical Loss Distribution by Injury Type


13%

12%

14%

29%

34%

49%

47%

41%

36%

10%

12%

1%

1%

1%

Medical Only Temporary Total Permanent Partial Permanent Total Fatal


Glossary


Active Claim—A workers compensation claim for which there is at least one medical service provided during that service year.

Ambulatory Surgical Center (ASC)—A state-licensed facility that is used mainly to perform outpatient surgery, has a staff of physicians, has continuous physician and nursing care, and does not provide for overnight stays. An ASC can bill for facility fees much like a hospital, but generally has a separate fee schedule.

Assigned Risk Adjustment Program (ARAP)—An assigned risk market program that surcharges residual market risks based on the magnitude of their experience rating modification.

Calendar-Accident Year (CAY)—The accumulation of loss data on all accidents with the date of occurrence falling within a given calendar year. The premium figure is the same as that used in calendar year experience.

82

Glossary


Calendar Year (CY)—Experience of earned premium and loss transactions occurring within the calendar year beginning January 1, irrespective of the contractual dates of the policies to which the transactions relate and the dates of the accidents.

Claim Frequency—The number of claims per unit of exposure; for example, the number of claims per million dollars of premium or per 100 workers.

Claim Severity—The average cost of a claim. Severity is calculated by dividing total losses by the total number of claims.

Combined Ratio—The sum of the (1) loss ratio, (2) expense ratio, and (3) dividend ratio for a given time period.

Detailed Claim Information (DCI)—An NCCI Call that collects detailed information on an individual workers compensation lost-time claim basis, such as type of injury, whether or not an attorney was involved, and the timing of the claim’s report to the carrier.

83

Glossary


Diagnosis Groups—Based on ICD-10 codes; groups based on similar injuries and parts of body.

Direct Written Premium (DWP)—The gross premium income adjusted for additional or return premiums but excluding any reinsurance premiums.

Drugs—Includes any data reported by a National Drug Code (NDC). Also included are data for revenue codes, the Healthcare Common Procedure Code System (HCPCS), and other state-specific codes that represent drugs.

Durable Medical Equipment—Equipment that is primarily and customarily used to serve a medical purpose, can withstand repeated use, could normally be rented and used by successive patients, is appropriate for use in the home, and is not generally useful to a person in the absence of an illness or injury.

84

Glossary


Hospital Inpatient Service—Services for a patient who is admitted to a hospital for treatment that requires at least one overnight stay (more than 24 hours in a hospital). Payment for a hospital inpatient service is limited to the payment made for the facility cost.

Hospital Inpatient Stay—A hospital admission of a patient requiring hospitalization of at least one 24-hour period.

Hospital Outpatient Service—Any type of medical or surgical care performed at a hospital that is not expected to result in an overnight hospital stay (less than 24 hours in a hospital). Payment for a hospital outpatient service is limited to the payment made for the facility cost.

Indemnity Benefits—Payments by an insurance company to cover an injured worker’s time lost from work. These benefits are also referred to as “wage replacement” benefits.

Loss Ratio—The ratio of losses to premium for a given time period.

85

Glossary


Lost-Time (LT) Claims—Claims resulting in indemnity benefits (and usually medical benefits) being paid to, or on behalf of, the injured worker for time lost from work.

Medical Data Call—Captures transaction-level detail for medical billings that were processed on or after July 1, 2010. All medical transactions with the jurisdiction state in any applicable Medical Data Call state are reportable. This includes all workers compensation claims, including medical-only claims.

Medical-Only Claims—Claims resulting in only medical benefits being paid on behalf of an injured worker.

Net Written Premium (NWP)—The gross premium income adjusted for additional or return premiums; includes any additions for reinsurance assumed and any deductions for reinsurance ceded.

86

Glossary


Permanent Partial (PP)—A disability that is permanent but does not involve a total inability to work. The specific definition and associated workers compensation benefits are defined by statute and vary by jurisdiction.

Policy Year (PY)—The year of the effective date of the policy. Policy year financial results summarize experience for all policies with effective dates in a given calendar year period.

Prescription Count—Number of drug prescriptions, where refills are counted separately.

Schedule Rating—A debit and credit plan that recognizes variations in the hazard-causing features of an individual risk.

Service Year—A loss accounting term for experience that is summarized by the calendar year in which a medical service was provided.

87

Glossary


Surgery Visit—A visit in which at least one surgery procedure is performed based on the reported procedure code.

Take-Out Credit Program—An assigned risk program that encourages carriers to write current residual market risks in the competitive voluntary marketplace.

Temporary Total (TT)—A disability that totally disables a worker for a temporary period of time.

Units—The number of units of service performed or the quantity of drugs dispensed. For Paid Procedure Codes related to medications, the quantity/units depend on the type of drug:

For tablets, capsules, suppositories, and nonfilled syringes, units represent the actual number of the drug provided. For example, a bottle of 30 pills would have 30 units.

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Glossary


For liquids, suspensions, solutions, creams, ointments, and bulk powders that are dispensed in standard packages, the units are specified by the procedure code. For example, a cream is dispensed in a standard tube, which is defined as a single unit.

For liquids, suspensions, solutions, creams, ointments, and bulk powders that are not dispensed in standard packages, the number of units is the amount provided in its standard unit of measurement (e.g., milliliters, grams, ounces). For example, codeine cough syrup dispensed by a pharmacist into a four-ounce bottle would be reported as four units.

Visit—Any hospital outpatient or ASC service or set of services provided to a claimant on a specific date. At any visit, more than one procedure may be performed, and any claimant may have more than one visit.

89

Glossary


Appendix


NCCI’s Workers Compensation Resources

Financial Aggregate Calls

Used for aggregate ratemaking

Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan)

Used for class ratemaking

Detailed Claim Information

In-depth sample of lost-time claims

Policy Data

Policy declaration page information

91


Financial Aggregate Calls

Collected Annually

Policy and calendar-accident year basis

Statewide and assigned risk data

Premiums, Losses, and Claim Counts

Evaluated as of December 31

Purpose

Basis for overall aggregate rate indication

Research

92


Policy Year Financial Aggregate Data

1/1/2017 12/31/20171/1/2016 1/1/2020 12/31/2020

Policy Expiration Date

Policy Effective Date

Policy Year2016

Policy Year2017

Policy Year2020

93


Calendar-Accident Year Financial Aggregate Data

1/1/2018 12/31/20181/1/2017 1/1/2021 12/31/2021

Policy Expiration Date

Policy Effective Date

Calendar-Accident

Year2017

Calendar-Accident

Year2018

Calendar-Accident

Year2021

94


Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan) Data

Experience by Policy Detail Exposure, premium, and experience rating modifications

Individual claims by injury type

Purposes Classification relativities

Experience Rating Plan

Research

95


Valuation of Statistical Plan Data

PolicyEffective

18 Months

1stReport

Valuation

2ndReport

Valuation

3rdReport

Valuation

4thReport

Valuation

5thReport

Valuation

30 Months42 Months

54 Months66 Months

96

Documents

Alabama - NCCI Holdings Inc. · Claims per $1M Pure Premium, Private Carriers and State Funds—NCCI States 2010 and 2011 adjusted primarily for significant changes in audit activity