Bulletin 2008-10 Workers Compensation Loss Cost Filing-Adoption Procedures

BULLETIN NUMBER 2008-10 TO: Insurers Writing Workers' Compensation Insurance Business in South Carolina FROM: Scott H. Richardson, CPC Director SUBJECT: Workers' Compensation Loss Cost Filing/Adoption Procedures DATE: May 29, 2008 PURPOSE: The National Council on Compensation Insurance (NCCI) is the workers' compensation rating organization in South Carolina. As such, they file the prospective loss costs with the South Carolina Department of Insurance (Department) for approval. This bulletin specifies the procedures for insurer members of NCCI to adopt the approved loss costs and outlines the procedures for the filing of the insurer's loss cost multiplier (LCM). PROCEDURE FOR ADOPTING NE\V LOSS COSTS South Carolina is an auto-adopt state; however, each insurer must individually determine the final rates it will file and the effective date of any rate changes. South Carolina law requires a rate filing be submitted for approval when an insurer wishes to adopt a new loss cost. See S.C. Code Ann. §38-73-520 (2002). A separate fonn, Form 2008-A, Filing Adoption Fonn, has been created to expedite this process. If the insurer member decides to adopt updated approved loss costs, the insurer must submit Fonn 2008-A along with its filing. NCCI members are authorized to continue to use filed and approved rates until the rate is disapproved or the insurer makes its own filing to change its rates either by making an independent filing or by filing Form 2008-A, adopting NCCI's prospective loss costs and it is approved. The insurer must submit this form prior to adopting an approved loss cost. The insurer's rates will be the product of the approved loss costs and the insurer's approved loss cost multiplier. PROCEDlJRE FOR ADOPTING NE\V LOSS COST MULTIPLIERS South Carolina law requires insurers to file for approval any changes made to the loss cost multiplier. See S.C. Code Ann. §38-73-525. Bulletin 2007-13B requires changes to the loss cost multiplier be made on Form 2007-A at least 30 days prior to implementation. In accordance with South Carolina law, a copy of this form must also be submitted to the Consumer Advocate. Insurers have also been required to provide a copy of their desk file copy of the LCM filing to the Department. See S.C. Department of Insurance Bulletin No. 2007 -13B. Insurers were required to submit the desk file copy of their LCM showing their calculation of the LCM within 60 days of the date of the bulletin. Loss cost adjustments will remain in effect until the insurer withdraws them or files and receives approval of a revised LCM. What follovvs is a list of several scenarios designed to address questions about the appropriate procedures to follow. If. .. The insurer decides to use a revision of the prospective loss costs and effective date as filed and approved ... Then ... The insurer must file the Forn1 2008-A, Filing Adoption Fonn, for approval. The insurer decides to use the prospective The insurer must file Form 2008-A and loss costs as filed but with a different notify the Department of its effective effective date ... date. The insurer decides to use the revision of the prospective loss costs, and wishes to change its loss cost multiplier. .. The insurer decides not to revise its rates using the prospective loss costs ... The insurer decides not to revise its rates using the prospective loss costs but wishes to update its loss cost multiplier. .. The insurer does not wish to revise its loss cost multiplier. .. The insurer must file for approval Fonn 2008-A and a revised 2007-A fonn. The insurer does not file anything with the Department. The insurer does not file anything with the Department for the loss cost, but must file a revised Form 2007-A for the LCM for approval. The insurer does not file anything with the Department, but must have the desk copy on file with the Department. Bulletins 2007-13 and 2007-138 describe in detail the information required to be filed for the loss cost multiplier. These bulletins may be accessed by visiting the Department's website at http:.//www.doi.sc.gov. Additional questions concerning this bulletin 1 should be directed to Carla Griffin at 803-737-6230 or cgriffin@doi.sc.gov. 1 Bulletins are the method by which the Director of Insurance forn1ally communicates with persons and entities regulated by the Department. Bulletins are departmental interpretations of South Carolina insurance laws and regulations and provide guidance on the Department's enforcement approach. Bulletins do not provide legal advice. Readers should consult applicable statutes and regulations or contact an attorney of their choice for legal advice or if additional information is needed. FORM 2008-A SOUTH CAROLINA DEPARTMENT OF INSURANCE INSURER RATE FILING ADOPTION OF RATING ORGANIZATION PROSPECTIVE LOSS COSTS DATE: ~~----~ INSURER NAME ADDRESS PERSON RESPONSIBLE FOR FILING ______________ _ TITLE -------------------------- TELEPHONE _________ _ INSURER NAIC # _________ _ LINE OF BUSINESS ---------- RATING ORGANIZATION _____ _ REFERENCE FILING # --------- PROPOSED RATE LEVEL CHANGE ___ %) EFFECTIVE DATE __ _ PRIOR DATE OF APPROVED LOSS COST BEING USED ________ _ LOSS COST MULTIPLIER- DATE OF LAST FILING APPROVED _____ _ DESK COPY SUBMISSION DATE -------------------