What are NCCI's plans for submitting loss cost/rate filings during the upcoming rate filing season?
NCCI began submitting annual jurisdiction-specific loss cost/rate experience filings in July 2021.
The proposed effective dates of the filings will be the same as in the past, ranging from November 2021 to August 2022, and the timing of the filings will be generally consistent with past years. For more information on anticipated filing dates and effective dates, see the current
Status of Rate Revisions Circular.
Will the impact of the COVID-19 pandemic on workers compensation (WC) costs be reflected in the loss cost/rate filings?
Ratemaking is prospective in nature. This means that it reflects anticipated losses and payroll during the period when the proposed loss costs/rates would be in effect, generally during 2022 and 2023. For ratemaking purposes, NCCI is treating the COVID-19 pandemic as a catastrophic event. Therefore, reported COVID-19-related claims will be excluded from the determination of loss costs and rates because those claims are not expected to be predictive of the loss experience that may arise during the upcoming loss cost and rate filings' prospective periods.
Compensable claims directly attributable to the COVID-19 pandemic and reported under Catastrophe Number 12 will be excluded from the data underlying state loss cost and rate filings. This is consistent with the removal of those claims from experience rating calculations and merit rating plans (where applicable).
In addition, after a comprehensive review, NCCI has determined that, in general, its standard ratemaking procedures and methodologies remain appropriate. However, we recognize that each state is unique. As such, and consistent with past practice, NCCI will evaluate each state on its own and consider whether any departures from standard methodologies are warranted. Additional detail will be included with the loss cost and rate filings, as applicable.
What is NCCI doing to address the exposure of the WC system to future pandemic losses?
NCCI reviewed its actuarial catastrophe methodology as a result of COVID-19. Currently, the Catastrophe (other than Certified Acts of Terrorism) provision accounts for single-event losses in excess of $50 million caused only by earthquakes, noncertified acts of terrorism, or catastrophic industrial accidents.
The COVID-19 pandemic has shown that there are additional perils which may result in catastrophic losses that exceed $50 million. NCCI's filing proposes that any event which exceeds $50 million in losses be removed from the data used in ratemaking.
Consequently, during this rate filing season NCCI's filings address future pandemic losses in one of two ways:
For states
with an approved
Catastrophe (other than Certified Acts of Terrorism) provision
- An NCCI item filing will include a proposed change to the definition of this provision to include any single event or peril resulting in aggregate WC losses in excess of $50 million (which may include pandemics)
For states
without an approved
Catastrophe (other than Certified Acts of Terrorism) provision
- An NCCI item filing will propose a
Catastrophe (other than Certified Acts of Terrorism) provision, for any single event or peril resulting in aggregate WC losses in excess of $50 million (which may include pandemics)
This approach recognizes that there are additional catastrophic exposures on WC system costs that should be considered in the determination of loss costs/rates in adherence with the Actuarial Standards of Practice. Additional detail on this approach will be included with the loss cost and rate filings, as applicable.
