1. Presented by Steven Weeks AmFed April 2019
MS Workers’ Compensation
& Self-insurance:
A Prognosis of the Industry
Presented by Steven Weeks
AmFed
April 2019

2. Triage Plan Setting the Tone – a historical perspective Vital Signs
Internal Examination
Loss dollar
Rate adequacy
Expense load – or cost of production including excess
External Examination
Competition
Medical Costs
NCCI
Legal Environment
Prognosis - ?

3. At any one time, what was the highest number of approved self-insured groups in MS?
What is it today?
What’s changed and why?
What’s on the horizon?
Initial Assessment

4. The Loss Dollar Indemnity and Medical
Falling Rate
Medical CPI
Loss Dollar
Competition
The Loss Dollar Indemnity and Medical

5. Rate Adequacy Combined Ratio Workers’ Comp Private Carriers

6. On average the commercial insurance industry is operating at a 25% - 32% expense load. This leaves 60% of the premium dollar to pay claims and 8% -15% profit margin.
Expenses
Underwriting, claims, risk management
Ancillary costs and services – accounting, actuarial, taxes, fees and other expenses
Acquisition costs/commissions
Excess coverage
As an industry, are we efficient?
Expenses – a key driver

7. Industry Drivers Commercial market Frequency and/or severity of claims
Statutory change
Regulatory change
Case law – impact toward future rate
Economic Outlook

8. Policyholder Surplus $781.5 Billion (all time high)

9. Cost Drivers 2002 – 2016: Cumulative Change -39.5%
Y/Y Average Change -3%
(Industry -3.7%)
Lost-Time Claim Frequency
Cumulative Change +15.2%
Y/Y Average Change +1.2%
(Industry +22.5%)
Severity
Previous 6 years: ranging 3% - 6%
Medical Inflation
Cost Drivers

10. Mississippi Historical NCCI Loss Cost Changes by Year

11. Regulatory and Legal Regulatory: Substantive statutory changes in 2012
Rules: Continued positive changes and improvements
Legal: No significant judicial rulings as in Alabama and Florida
Regulatory and Legal

12. Economic: Is a recession imminent?
Yield Curve inverted briefly Q This may signal a less positive economic outlook, e.g., economic slowdown or recession.
We are either at or near full-employment. This could be an economic headwind.
The Fed is very cautious regarding additional interest rate hikes for the immediate future.

13. Outlook Commercial market Cumulative rate change of -48.1% since 2009.
Profitable results continue to be published.
Policyholder surplus at historic levels.
Cumulative rate change of -48.1% since 2009.
Full-employment concerns.
Longest economic expansion since WWII.
Yield curve inversion.
Recession on the horizon?

14. Treatment Plan Increase efficiency Reduce expenses Improve loss dollar
Consider creative solutions
Improve services to create value
Develop strategic partnerships
Internal
Be aware of your surroundings
Deliberate planning around external pressures
Identify strategic opportunities
External
Treatment Plan

15. Our Mission
Our Mission is to place the best interest of our customer first and conduct all our business in a highly professional and ethical manner.
Our most valued asset is our reputation. We believe that nothing can be gained slower or lost quicker, so we strive, every day, to maintain this accomplishment.

16. Partnering with AmFed
AmFed is committed to providing a superior workers’ compensation product to both the commercial and self-insured industries:
Competitive Rates and Pricing
Multi – State Coverage options
A.M. Best A- rated     
Digitally Savvy
Online payments, safety courses and claims extranet for insureds
Online quoting and accessibility for agents