1. Individual Risk Pricing Dick Root – Underwriting Specialist

2. Individual Risk Pricing Further refines account pricing to individual risk characteristics Determines prospective pricing Provides incentives to improve or maintain good safety practices to reduce costs

3. Individual Risk Pricing Plans Experience Rating Construction Credit Medical Deductibles Scheduled Rating Volume Discount

4. Experience Rating Provides credit or debit based on loss experience over the last three years. Applied to accounts with average premium over $5,000 in last three years. Plan rules are adopted from NCCI and used by all companies in Montana Payroll and losses are reported to NCCI

5. Experience Rating Plan Parameters Limits loss to 30% for medical only claims Limits maximum claim to $113,000 Limits maximum debit based on size of risk Plan does not include experience for the most recently completed year Experience follows the risk due to ownership change

6. Construction Credit Plan applies to 85 class codes in the construction industry Credit based on hourly wage paid over a 40 hour work week Hourly wage under 13.79 is zero credit Hourly wage $17.00-$19.00 is 6% credit

7. Medical Deductible Credit applied for a deductible amount selected by policyholder each year Deductible amounts can be for medical only Deductible AmountCredit $5006.2% $1,0008.6% $1,50010.1% $2,50012.5%

8. Scheduled Rating Provides credits or debits based on risk characteristics other than experience mod. –New Ownership –Change in operations, equipment or location –Positive or negative safety practices –Early return to work programs –Timely reporting of claims –Loss Rating model to reflect most current loss trend not recognized in experience rating

9. State Agency Pricing Aggregate price for State Agencies increased 34% effective 7/1/2003. State Agencies Loss Experience State Agencies Rate History State Agency Final Pricing

10. State Agencies Combined Ratio

11. State Agencies $$$ Losses YearLoss 1999$1,264300 2000$404,189 2001$2,494,300 2002$1,452,031 4 Year Total$5,614,820

12. State Agency Manual Rates (Wtd Avg.)

13. State Agency Final Pricing State Agencies have their own class codes-manual rates are determined from their own loss experience State Agency manual rates include recent court case and benefit level changes (+4.8%) Each Agency has their own experience modification Pricing for each agency is the same methodology as all other Montana State Fund policyholders.

14. Committee Questions