Adoption of Loss Costs Filed by the Delaware Compensation Rating Bureau

Commissioner Donna Lee H. Williams 841 Silver Lake Boulevard * Dover, DE 19904 * (302) 739-4251 (Hours: Mon-Fri 8-4:30 EST) www.state.de.us/inscom FORMS AND RATES BULLETIN 14 INCORPORATED Submission Date:__________________ DCRB Reference Filing No.:_________________ Applicable to policies effective on and after:________________________________ INSURER NAME:_____________________________________________________ INSURER NAIC NO.:_________________ INDICATED MULTIPLIER:______ The above insurer hereby declares that it is a member or subscriber of the Delaware Compensation Rating Bureau (“DCRB”). The insurer hereby files to be deemed to have independently submitted as its own filing the prospective loss costs in the captioned reference filing. The insurer’s rates will be the combination of the DCRB loss costs approved by the Delaware Insurance Department and the company’s indicated multiplier, as shown above, along with any expense contract, premium discount table, size-of-premium expense table for retrospective rating plans, and minimum premium formula specified in the company’s attached manual exception pages. The indicated multiplier, along with any expense constant, premium discount table and the minimum premium formula filed, represent a rate level increase _____ or decrease _____ of _____% and a premium level increase _____ or decrease _____ of _____%. The indicated multiplier and the attached exception pages apply only to the DCRB reference filing indicated above. The insurer understands that this will necessitate the submission of a new adoption form and exception pages prior to the effective date of any future loss costs reference filing. SUMMARY OF SUPPORTING INFORMATION WORKERS’ COMPENSATION LOSS COST MULTIPLIER Insurer:_______________________________ NAIC No.:____________________ DCRB Reference Filing No.:______________________________________________ Effective Date of Multiplier:______________________________________________ Development of Expected Loss Ratio (Expressed as a percent of standard premium at company rate): AVERAGE A. Commission _______________% B. Other Acquisition _______________% C. General Expense _______________% D. Taxes, Licenses and Fees _______________% E. Underwriting Profit & Contingencies _______________% F. Residual Market Costs _______________% G. Premium Discount _______________% H. Insurance Fund Assessment (Second Injury Fund) _______________% I. Dividend Provision (Participating Plan) _______________% J. Other (Explain) _______________% K. Total _______________% Expected Loss Ratio (100%-K) _______________% Actual Incurred Expense Ratios for three (3) most recent available years. (Commission and General Expense expressed as a percent of written premium at company rates. Other components expressed as percents of standard earned premium at company rates). CY_________ CY_________ CY_________ AVERAGE A. Commission _________ _________ _________ _________ B. Other Acquisition _________ _________ _________ __ _______ C. General Expense _________ _________ _________ _________ D. Taxes, Licenses & Fees _________ _________ _________ _________ E. Underwriting Profit & Contingencies _________ _________ _________ _________ F. Residual Market Costs _________ _________ _________ _________ G. Premium Discount _________ _________ _________ _________ H. Insurance Fund Assessment (Second Injury Fund) _________ _________ _________ _________ I. Dividend Provision (Participating Plan) _________ _________ _________ _________ J. Other (Explain) _________ _________ _________ _________ K. Total _________ _________ _________ _________ Indicated Company Loss Cost Multiplier:______________ Example: Assume Loss and Loss Adjustment Ratio is 0.650. Loss Cost Multiplier with no deviation is 1.0/0.650 = 1.5385. Loss Cost Multiplier with 15% downward deviation is 0.85/0.650 = 1.3077. Loss Cost Multiplier with 15% upward deviation is 1.15/0.650 = 1.7692. COMPLETED BY:____________________________________________ TELEPHONE NO.:_______________________ NOTE: If an insurer wishes to make any modifications to the loss costs led by DCRB (other than the application of a multiplier to represent the insurer’s expenses, profit and contingencies), the resulting rates will be considered to be independent rates, and shall be subject to the 30 day review provision of Title 18 Del. C., Section 2610. CHECK ALL THAT APPLY: Manual exception pages attached for: __________ Minimum Premium Formula __________ Expense Constant __________ Discount Table __________ Retro Expense Table REVISED LOSS COST MULTIPLIER CALCULATION SPREADSHEET TO BE INCORPORATED WITH BULLETIN 14 Workers’ Compensation Insurance Loss Cost Multiplier General Instructions Commissions, premium tax and other state tax provisions are to reflect the ratio of commissions paid, premium tax paid and other state tax paid to company manual premium. Other acquisition and general expense are to reflect the ratio of other acquisition expense paid and general expense paid to company standard earned premium. Standard earned premium is to reflect adjustment for expense constant premium schedule rating premium. Dividend Provision (Participating Plan) Loss cost multipliers for use with participating policies shall contain a provision for policyholder dividends. Policyholder dividends shall reflect the ratio of policyholder dividends paid to company standard earned premium adjusted to reflect expense constant premium and schedule rating premium. Standard earned premium shall be adjusted reflecting an assumed underlying expense constant equal to the most recently filed expense constant by Delaware Compensation Rating Bureau. Deviations Deviation from indicated manual rates shall reflect adjusted company losses compared to Delaware Compensation Rating Bureau to the extent credible. Losses shall be provided separately for indemnity and medical coverages. Losses may be either calendar year losses with all IBNR or policy year incurred losses developed to ultimate settlement. If the company elects to submit policy year loss data, it is required to provide underlying loss development triangles for indemnity and medical coverages separately. Insurance Fund Assessment (Second Injury Fund) Insurance Fund Assessment to be used with revised rates will be provided by Delaware Compensation Rating Bureau in its circular letter detailing changes to loss costs and other rating elements. Revised Loss Cost Multiplier Calculation Spreadsheet Page 2 Administrative Assessment Administration Assessment will continue to be built into voluntary market loss costs. Expense Exhibits identified as (I) or (II) shall be completed and underlying supporting data shall accompany the company loss cost multiplier filing. Multipliers shall be filed reflecting most recent expense data, with each Delaware Compensation Rating Bureau loss cost revision. Failure to provide complete expense exhibits and provide underlying support shall result in disapproval of the proposed company filing and company(s) will be filed by reference for residual market rates and rating elements. All reference filings of this type shall remain in effect until the next subsequent Delaware Compensation Rating Bureau revision of loss costs. NOTES: (1) Commissions, premium tax, license and fees are to be calculated as a percentage of company manual premium. Other acquisition and general administrative expense are to be calculated as a percentage of standard earned premium and standard earned premium is required to be adjusted to reflect schedule rating and expense constant. (2) Insurers having previously filed and are currently using rating tiers within the same company or have company rate differentials in effect may continue to use them until further notice.