NCCI Experience Modification Factor 2024 Changes FAQs

The National Council on Compensation Insurance (NCCI) is making alterations to its experience modification factor for 2024. 这些变化预计将在11月11日或之后的每个州的常规申请日期生效. 1, 2023.

This Work Comp Insights provides the NCCI’s answers to frequently asked questions (FAQs) concerning the new changes. 

General FAQs

What is changing?

经验评级计划(计划)的公式和总体结构保持不变. Certain underlying components will be impacted:

• Primary/excess loss split point (split point)
• 州索赔事故限制(SAL)和美国海岸和港口工人赔偿(USL)&HW) per claim accident limitation
• G value
• 计算重量(W)和压舱物(B)值的可信性参数
• Discount ratios (D-ratios)

When will the proposed changes in Item E-1049 become effective?

This item will become effective for experience rating modifications with rating effective dates on and after each state’s anticipated loss cost/rate filing, which are generally effective in 2024. The specific state rating effective dates span from Nov. 1, 2023, to Aug. 1, 2024, with the most common effective date being Jan. 1, 2024.

Why are these changes being proposed now?

NCCI periodically evaluates Plan methodology and performance. During the latest review, NCCI identified some opportunities to improve Plan performance, with revisions that will result in:

• A more accurate and predictive experience rating modification
• Experience rating modifications that reflect a more equitable determination of primary and excess losses across states with varying cost levels
• 在索赔费用与全国平均水平差异较大的州，更具可比性的计划绩效
• Experience rating modifications that are less sensitive to large outlier claims without sacrificing predictive accuracy
• More consistent calculation of each employer’s expected claim count, 哪一种方法能使每个雇主的损失经历获得更适当的可信度.
• 重新校准了权重和压舱值背后的可信度参数，以增加雇主之间的公平
• The elimination of complex calculations where no value is added

Where is the item being filed?

Item E-1409 is being filed in all NCCI states (including AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT and WV). 它将被推荐给以下独立的主席团国家考虑, MA, MN, NC and WI.

How will these changes impact premiums?

These changes are expected to be premium-neutral in total. 每个州的总体平均体验评级修改预计不会受到这些变化的影响. Initial fluctuations at the individual employer level may be offset by changes in loss experience and routine updates to rating values. Ultimately, this update to the Plan is expected to result in overall improved performance of the Plan and increased equity across individual employers.

这些变化是否会进一步推动unity(1)的经验评级修改.00)?

对于任何雇主来说，经验评级的调整可能会增加、减少或保持不变. Overall, the proposed changes to the experience rating modification calculation are expected to produce Plan performance that is both improved and more comparable across states.

这些变化会影响参与州际体验评级的独立机构的参与吗? No. 所有建议的变更都符合现有的计划框架(即, a statewide split point). Interstate experience rating will continue without disruption regardless of whether other bureaus decide to adopt similar changes to their own experience rating values and methodologies

Rating Value Changes

What is a split point?

The primary/excess loss split point divides the losses from each historical claim into two layers: primary losses (those beneath the split point) and excess losses (those above the split point).

For example, if the split point is $15,000, a claim totaling $50,000 would contribute $15,000 to the primary layer and $35,000 to the excess layer. 在经验评级修正公式中，初级损失的权重大于超额损失. 正因为如此，初级损失对经验评级修改的影响更大.

The split point is currently a countrywide value ($18,500美元)，根据每个州的年度损失成本/费率申请进行更新，以反映全国索赔成本的变化.

How is the split point changing?

A key improvement of the proposed Plan changes is increased recognition of differences in state cost levels through a state-specific split point. Under the current Plan, 分裂点是基于一个共同的水平，并没有不同的NCCI状态.

For example, instead of the current split point value of $18,500 applying to all states, under the proposed Plan, 索赔严重程度高于平均水平的州可能有25美元的分割点价值,000, 而索赔严重程度低于平均水平的州可能有15美元的分割点价值,000.

What is the benefit of a state-specific split point?

当NCCI评估当前计划在各州的表现时, 很明显，进一步认识到各州的严重程度差异是一个改进的机会.

The use of state-specific split point values that reflect individual state cost differences is intended to better align across states the weight given to actual employer loss experience in the experience rating modification calculation. In turn, this is expected to produce improved and more comparable Plan performance in states with claim costs that vary significantly from the countrywide average.

Will the new split point value continue to be updated each year?

Yes. 跟上索赔费用的变化，并与其他经验评级参数保持一致, it is anticipated that the split point value will be indexed concurrently with each state’s annual loss cost/rate filing. 这与计算经验评级修改时使用的所有其他评级值一致.

What is the state per claim accident limitation (SAL)?

SAL是可能影响体验评级调整的任何索赔的最高金额. For example, if the SAL is $200,000, 那么，任何损失超过这一数额的索赔将以200美元为限,000，以便计算经验评级修改. 目前，SAL的计算方法是每个案例的州平均成本乘以25. SAL也可以在状态参考点(SRP)的10%处得到。, 其中SRP的计算方法是州平均每箱成本乘以250.

The SAL is intended to curtail the impact that extremely large outlier claims have on the experience rating modification because these dollars are not expected to be predictive of future loss experience beyond a certain point.

How is the SAL changing?

SAL将使用每个州损失时间索赔的第95个百分位数来计算. 这种新方法预计将在所有州产生较低的限制, making the experience rating modifications less sensitive to large outlier claims without sacrificing predictive accuracy.

Why is it desirable to have the SAL be more consistent across states while the split point is being proposed to vary by state?

In short, the values have different purposes. The SAL is used to curtail the impact of large claims on the experience rating modification because large outlier claims are generally not expected to be predictive of future loss experience. The use of a state-level 95th percentile results in an SAL that is expected to impact the largest 5% of loss-time claims. On the other hand, the split point is meant to segment the dollars associated with each claim into primary and excess layers—dollars beneath the split point enter the primary layer, while those above the split point belong to the excess layer. The proposed split points are established so that they result in approximately the same share of total loss dollars being allocated to the primary layer across states. 从这个意义上说，更新后的分裂点在各州之间也更加一致.

其他单一权利要求或多项权利要求的限制有任何变化吗?

The USL&HW per claim accident limitation is being updated to reflect the 95th percentile of lost-time claims belonging to F classifications. Similar to the SAL change, 随着时间的推移，这种新方法有望产生更稳定的限制.

The state multiple-claim accident limitation will continue to be calculated as twice the corresponding per claim accident limitation. The disease loss limitation will continue to be calculated using a multiple of the approved per claim accident limitation as detailed in the Plan.

No other accident limits are changing at this time.

What is the G value?

G值表示州平均索赔严重程度(单位为千美元). 它的主要用途是确定雇主的预期索赔数, 什么是赋予其主要损失和超额损失经验的可信度的基础. G值根据每个州的年度损失成本/费率文件进行更新.

How is the G value changing?

The calculation of G will be revised to reflect accident limitations and the 70% reduction of medical-only losses (per the experience rating adjustment [ERA]), where applicable.

In the calculation of an employer’s expected claim count, 雇主的预期损失除以G值(平均申索严重程度). Because expected losses already reflect ERA and accident limitations, this change in how G is calculated makes for a more consistent calculation of each employer’s expected claim count. In turn, 预计这将导致对每个雇主的损失经历赋予更适当的可信度.

What are the credibility parameters?

The W and B values influence the degree to which an employer’s actual losses impact the experience rating modification. W和B值由一组10个可信度参数决定, and these parameters have not been updated in over two decades.

How are the credibility parameters changing?

The proposed credibility parameters underlying the W and B values have been recalibrated to increase equity across employers.

What about the premium eligibility threshold? 

 To qualify for experience rating, 雇主的主题保费必须达到或超过州的最低资格金额. 本计划更新建议不对当前保费资格阈值索引方法进行更改

This Work Comp Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. 读者应联系法律顾问或保险专业人士以获得适当的建议. Design © 2023 Zywave, Inc. All rights reserved.