Workers’ Compensation Rate and Supplementary Rate Information Filings

PURPOSE: This rule sets forth the rules and procedures which the director of the Department of Commerce and Insurance deems necessary to carry out the provisions for individual insurance companies making Workers’ Compensation insurance rate filings pursuant to sections 287.930–287.975, RSMo. When making rate filings, individual insurers may utilize historical rate-making data, as defined in this rule, and developed and tended as follows: 1) by the Missouri Department of Commerce and Insurance, 2) by the designated advisory organization or 3) by the insurer itself. (1) Applicability and Scope. This rule applies to statutory Workers’ Compensation insurance as described in sections 287.090, 287.280 and 287.310, RSMo and to insurers making filings under section 287.947, RSMo. (2) Definitions. (A) Accepted actuarial standards means the standards adopted by the Casualty Actuarial Society in its Statement of Principles Regarding Property and Casualty Insurance Ratemaking, and the Standards of Practice adopted by the Actuarial Standards Board. (B) Advisory organization means any entity which has two (2) or more member insurers or is controlled either directly or indirectly by two (2) or more insurers, and which assists insurers in ratemaking related activities and is licensed pursuant to section 287.967, RSMo. Two (2) or more insurers which have a common ownership or operate in this state under common management or control constitute a single insurer for the purposes of this definition. Advisory organization does not include a joint underwriting association, any actuarial or legal consultant, any employee of an insurer or insurers under common control or management or their employees or manager. (C) Director means the director of the Missouri Department of Commerce and Insurance. (D) Expenses means that portion of any rate attributable to acquisition and field supervision; collection expenses and general expenses; and taxes, licenses and fees. (E) Historical ratemaking data means information respecting Workers’ Compensation insurance exposures, premiums and claims paid or reserves held for claims reported, including actual loss adjustment expenses paid or reserved for claims paid or reported but excluding all other expenses or profit, without judgmental adjustments such as loss development and projections through loss trending to a future point in time. (F) Loss trending means any procedure projecting developed losses to the average date of loss for the period during which the policies are to be effective. (G) Pure premium rate means that portion of the rate which represents the loss cost per unit of exposure including loss adjustment expense. (H) Rate means the costs of insurance per exposure base unit, prior to any application of individual risk modifications based on loss or expense considerations, and does not include minimum premiums. (I) Supplementary rate information means any manual or plan of rates, classification system, rating schedule, minimum premium, policy fee, rating rule, rating plan and any other similar information needed to determine the applicable premium for an insured. (J) Supporting information means the experience and judgment of the filer and the experience or data of other insurers or organizations relied on by the filer, the interpretation of any statistical data relied on by the filer, descriptions of methods used in making the rates and any other similar information required to be filed by the director. (3) Reference Filings—Advisory Historical Loss Costs. (A) The advisory organization shall make reference filings and distribute historical ratemaking data in the following manner adjusted for: 1. Development and loss trending by the advisory organization; 2. Development and loss trending by the director; and 3. Loss development without any trend factor. (B) An insurer shall satisfy its rate filing obligation by submitting— 1. Final rates for each classification in which the insurer writes any voluntary market insurance; 2. The information required in section (4); and 3. All supplementary rate information used in developing the final premium of any insured. (4) Required Filing Documents. All insurer rate filings shall include the following documents: (A) Independent Rate Filing Form (Exhibit A); (B) Rate Development Summary Form (Exhibit B); (C) A TD-2 filing form and filing fee; and (D) The final rate pages, including supplementary rate information, indicating the rate for each classification that the insurer chooses to market. Insurers shall file these rates using an electronically readable format. The director will outline the format for making the filings. (5) Supplementary Rate Information. (A) Advisory organizations may not develop and make filings of supplementary rating information except as provided in section 287.972.1, RSMo. (B) Each insurer shall file all supplementary rate information it uses to determine the final premium of any insured employer. (6) Filing of Rates Effective January 1, 1994. All insurers writing Workers’ Compensation insurance in this state shall file their rates in effect on January 1, 1994, along with all supplementary rate information. Insurers shall file these rates and supplementary rate information not later than thirty (30) days after their effective date. (7) Filing of Rates Effective After January 1, 1994. All insurers filing rates after January 1, 1994, shall file these rates, along with all supplementary rate information, not later than thirty (30) days after their effective date. Nothing in this provision shall prevent insurers from making these filings at any time prior to the effective date of the filings. Exhibit A Independent Rate Filing Form Date: ______________________________________________________________________________________________________________ 1. Insurer Name & Address____________________________________________________________________________________________ _________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________ Person Responsible For Filing _________________________________________________________________________________________________________________ Title _____________________________________________________________________________________________________________ Telephone Number _________________________________________________________________________________________________ 2. Insurer NAIC #____________________________________________________________________________________________________ 3. Advisory Organization Reference Filing #_______________________________________________________________________________ 4. Proposed Rate Level Change ______________________% Proposed Premium Level Change ______________________% 5. Effective Date ______________________ 6. Attach “Rate Development Summary Form (Exhibit B).” 7. Attach TD-2 filing form and $50.00 filing fee (section 374.230(6), RSMo). AND INSURANCE Exhibit B RATE DEVELOPMENT SUMMARY FORM Date:_______________________________________________________________________________________________________________ Insurer Name:___________________________________________________________NAIC Number:________________________________ 1. This form is applicable only to the following employer classification(s), as approved in the uniform classification manual: (Please attach list) 2. Loss Cost Determination: A. The insurer hereby declares that it used the following historical ratemaking data to determine its final rates: (Please mark one) __________ Own Experience (only) __________ Advisory Organization’s __________ Combination of Above If the insured used a combination of historical rate-making data, the insurer hereby declares that the proportional weight given to such data is as follows: __________% Own Experience __________% Advisory Organization B. The insurer declares it used the following loss development factor(s) (LDF) in developing its loss costs: (Please mark one) (i)__________The advisory organization’s loss development factors. (ii)__________The insurer’s own loss development factors. If the insurer independently developed its own loss development factors, the insurer hereby declares that it used the following factors for each year of loss development: Policy Year/Accident Year LDF _______________________________________________ _______________________________ _______________________________________________ _______________________________ _______________________________________________ _______________________________ _______________________________________________ _______________________________ C. The insurer hereby declares that it used the following trend factor, combined for MEDICAL AND INDEMNITY, to trend the historical rate-making data: (Please mark one) (i)__________The advisory organization’s trend (ii)__________The insurer’s own trend If the insurer developed its own trend, the insurer hereby declares that it used the following trend factor: Annual Trend Factor Used_______________ 3. Development of Expected Loss Ratio. Please attach an exhibit detailing actual insurer expense data or other supporting information, or both. If selected and actual expense provisions differ, please explain. Selected Actual A. Commission Expense __________% __________% B. Other Acquisition Expense __________% __________% C. General Expense __________% __________% D. Taxes, License & Fees __________% __________% E. Underwriting Profit (Loss) & Contingencies __________% __________% F. Other Expenses (a) premium discount __________% __________% (b) dividends __________% __________% (c) ____________ __________% __________% (d) ____________ __________% __________% G. TOTAL __________% __________% 4. Rate level change for the indicated classifications _____________% AND INSURANCE AUTHORITY: sections 287.947 and 374.045, RSMo Supp. 1993.* Emergency rule filed Nov. 2, 1993, effective Jan. 1, 1994, expired April 1, 1994. Original rule filed Nov. 2, 1993, effective June 6, 1994. Non-substantive change filed Sept. 11, 2019, published Oct. 31, 2019. *Original authority: 287.947, RSMo 1993 and 374.045, RSMo 1967, amended 1993.