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Comparison of Montana to Assigned Risk Pools in Other States Senate Bill 304 Study Committee November 7, 2003 Jerry Keck, Administrator Employment Relations.

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Presentation on theme: "Comparison of Montana to Assigned Risk Pools in Other States Senate Bill 304 Study Committee November 7, 2003 Jerry Keck, Administrator Employment Relations."— Presentation transcript:

1 Comparison of Montana to Assigned Risk Pools in Other States Senate Bill 304 Study Committee November 7, 2003 Jerry Keck, Administrator Employment Relations Division Montana Department of Labor & Industry

2 2 Concerns – Questions To Be Addressed Would the sale of State Fund result in increase in premium for Montana employers? Would an increase in premiums cause more employers to go without workers’ compensation coverage? What impact would this have on the Uninsured Employers Fund?

3 3 Demographics of the Montana Market 2002 Premium Dollars 15% 40% 45% Most analysis of the workers’ compensation market is by premium dollars 27M 72M 81M

4 4 Demographics of the Montana Market 2002 Policy Count 16.3% 82% 1.7%

5 5 Demographics of the Montana Market 2002 Premium Dollars Compared to Policy Count 27M 26,806 72M 81M 5,

6 6 US Bureau of Labor Statistics* For Montana *Most current 1 st quarter K 72.6K 6.6K 225K Private Sector Number of Business Establishments and Employees Employers with <10 Employees Employers with =>10 Employees

7 7 US Bureau of Labor Statistics* Comparison of Montana to US *Most current 1 st quarter 2001 Employers with <10 Employees Employers with =>10 Employees Private Sector Number of Business Establishments and Employees

8 8 US Bureau of Labor Statistics* NCCI Assigned Risk Pool States Illinois69.1%Oregon76.2% Nevada71.1%New Mexico76.4% Indiana72.1%South Carolina77.1% Alabama73.3%New Hampshire77.1% South Dakota73.3%Connecticut77.2% Virginia73.6%Vermont77.8% North Carolina73.8%Alaska77.8% Kansas74.9%Idaho78.2% Mississippi74.9%Delaware79.0% Arizona75.0%District of Columbia79.1% Georgia75.1%New Jersey79.2% Iowa75.1% Montana82.5% Arkansas75.2% Percentage of Employers with < 10 Employees

9 9 NCCI Assigned Risk Pool 2002 States Included in the Pool AlabamaKansas AlaskaMississippi *Arizona 1 Nevada ArkansasNew Hampshire ConnecticutNew Jersey Delaware*New Mexico District of ColumbiaNorth Carolina Georgia*Oregon *Idaho 2 *South Carolina IllinoisSouth Dakota IndianaVermont IowaVirginia *These states have a competitive State Fund 1 Arizona State Fund is “carrier of last resort by Board Policy” (.4% of Assigned Risk Pool) 2 Idaho State Fund is “carrier of next to last resort” (1% of Assigned Risk Pool)

10 10 NCCI Assigned Risk Pool Statistics 2002 Premium Dollars of 24 NCCI States 19.5% 40.2%40.3% 217M 449M450M

11 11 NCCI Assigned Risk Pool Statistics 2002 Policy Count of 24 NCCI States 83.7% 14.6% 1.7%

12 12 NCCI Assigned Risk Pool Statistics 2002 Premium Dollars Compared to Policy Count of 24 NCCI States 217M 449M450M 184,292 32,003 3,812

13 13 Voluntary Market in 24 NCCI Assigned Risk Pool States Premium Dollars 9.1% 27.2% 63.7% 0.97B 2.89B 6.78B

14 14 Voluntary Market in 24 NCCI Assigned Risk Pool States Voluntary Market Compared to Assigned Risk Pool 217M 449M450M.97B 2.89B 6.78B

15 15 NCCI Assigned Risk Pool Statistics 2002 Percent of Assigned Risk Pool Policies Compared to Voluntary Market

16 16 NCCI Assigned Risk Pool Statistics 2002 Minimum Premiums Amount charged if true premium falls below a predetermined dollar amount Like a minimum shipping charge when you order goods by telephone or on the Internet Workers’ compensation insurance companies establish and file a minimum premium amount

17 17 NCCI Assigned Risk Pool States 2002 Minimum Premiums in Assigned Risk Pool Alabama$750Kansas$750 Alaska$500Michigan$750 *Arizona$750Nevada$750 Arkansas$750New Hampshire$750 Connecticut$750New Mexico$750 District of Columbia$750North Carolina$850 Georgia$750Oregon$500 **Idaho$300South Dakota$800 Illinois$750Vermont$750 Iowa$550Virginia$750 *Arizona has a competitive State Fund – only 0.4% of market in Assigned Risk Pool **Idaho has a competitive State Fund – only 1% of market in Assigned Risk Pool.

18 18 NCCI Assigned Risk Pool Statistics 2002 Minimum Premiums In Montana private carriers minimum premium is typically $750 –Premium $1 - $570 –Policy Expense Constant $180 Charged Minimum Premium $750 State Fund has minimum premium of $300 –Premium $1 - $185 –Policy Expense Constant $115 Charged Minimum Premium $300 State Fund premium between $300 and $750 –Premium$186 - $635 –Policy Expense Constant $115 Charged Premium$301 - $750

19 19 NCCI Assigned Risk Pool States 2002 Minimum Premiums State Fund Clerical Class Code Rate X Payroll (8810 class code rate =.77 X $20,000) $154 Policy Expense Constant115 Total$269 Montana State Fund Minimum Premium$300 Private Carrier Clerical Class Code Rate X Payroll (8810 class code rate =.74 X $20,000) $148 Private Carrier Expense Constant180 Total$328 Private Carrier Minimum$750

20 20 NCCI Assigned Risk Pool States 2002 Minimum Premiums State Fund Outside Sales Class Code Rate X Payroll (8742 class code rate =.86 X $45,946) $395 Policy Expense Constant115 Montana State Fund Premium$510 Private Carrier Outside Sales Class Code Rate X Payroll (8742 class code rate = 1.31 X $45,946) $601 Policy Expense Constant180 Private Carrier Premium$781

21 21 Demographics of the Montana Market 2002 Montana Policyholders # of Policies % of Employers MSF $300 Minimum Premium5, % MSF Premium $300 – $7506,57920% Policyholders with Premium under $5,000 Likely to be in Assigned Risk Pool (26,806 X 22.2%) 5,95118% Policyholders with Premiums $5,000 - $50,000 Likely to be in Assigned Risk Pool (5,338 X 14.9%) 7952% Policyholders with Premiums Over $50,000 Likely to be in Assigned Risk Pool (542 X 12%) 652% Total Number of Policies in Montana Market32,686

22 22 In Conclusion Approximately 7,000 employers who are placed in the Assigned Risk Pool may see increases based on Assigned Risk Pool rates Anticipate increased premium to cause more employers to go without workers’ compensation insurance Anticipate increased claims to Uninsured Employers Fund


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