1. PRESENTED BY IOWA MUNICIPALITIES WORKERS’ COMPENSATION ASSOCIATION

2. 370 cities 75 counties 80 political subdivisions 525 Members We Serve:

3. Financially Stable More than $18 million in premium/ $53 million in fund balance Five year loss ratio of 49% Safety National Reinsured (A Rated)

5. Board Nine-member Board of Trustees Five city representatives Four county representatives Elected of appointed officials from member entities

6. National Council on Compensation Insurance (NCCI) Publishes underwriting, data and reference manuals for all participating states The rate-setting organization for Iowa and 37 other states Distinguishes between various types of work and creates a class code for each Collects loss data from employers and sets the rate for each class code Adjusts rates by class code each year based on historical loss experience

7. NCCI Data Used to calculate premium by all workers’ compensation insurance providers in Iowa Data components in premium calculation: Payroll (by class code ) x Rate (per $100 payroll) x Experience Modification Factor (EMF) x Discounts/Surcharges = Net Premium + Expense Constant = Total Premium Data components you control to some degree: Payroll EMF (determined by your loss experience)

8. NCCI Experience Rating A formula that compares your payroll and claims by class code and then compares your entity’s experience (the result of the previous comparison) to your expected experience based on that of all other employers in the state. The resulting modifier adjusts your standard premium higher or lower according to your loss experience. The modifier for the next coverage year is based on your loss experience of the last 3 completed years.

9. 3 Years for Experience Rating 2016-172012-132013-142014-152015-16 Used to calculate the EMF for next fiscal year New EMF Used to calculate the current EMF Current EMF 2011-12

10. NCCI Experience Rating Formula  The formula in simple terms: Actual Losses Expected Losses  The final formula in simple terms: Modified Actual Losses Modified Expected Losses

11. NCCI Experience Rating Formula Actual Formula: Primary Actual Losses + Ballast Value + (Actual Excess Losses X Weighting Value) + (1-Weighting Value) X Expected Excess Losses ___________________________________________________________________________________________________ Primary Expected Losses + Ballast Value + (Expected Excess Losses X Weighting Value) + (1-Weighting Value) X Expected Excess Losses

12. The Experience Modification Factor (EMF) A multiplier that is applied to the pure premium A multiplier of 1.00 represents an average risk A multiplier greater than 1.00 – called a debit mod A multiplier less than 1.00 – called a credit mod Standard PremiumExperience Modification Factor Modified Premium $50,000X1.15=$57,500 $50,000X0.85=$42,500

13. So What’s Changing? Primary Loss components of the formula: Medical-only claims – previously included at full value, now reduced by 70% Indemnity claims – the portion of each included as primary loss being increased 2013 from $5,000 to $10,000 2014 from $10,000 to $13,500 2015 from $13,500 to $15,000

14. What have these changes meant? Weight shifts from frequency to severity Impact of claim frequency lessens Impact of claim severity increases So what about deductibles? Minor medical no longer effective Large deductible?

15. Budgeting for Workers’ Compensation Premium Determine your city’s estimated payroll, taking into consideration: Cost-of-living and/or merit pay increases Staffing changes Changes in operations Apply new NCCI rates (ask your agent) Review Experience modification worksheets and last 4 completed years of claims data valued as of 12/31 (ask your agent).

16. Budgeting for Workers’ Compensation Premium Discount Rating Plan – Longevity Credits Loss Experience Credits Large Premium Credits Good Experience Bonus New Mod Factors are now available! Payroll worksheets coming in March

17. Preventing Injuries/Accidents Make safety a priority – get everyone’s buy-in Form a Safety Committee Create an incident review team Develop written safety programs and train employees Incorporate a disciplinary policy for unsafe behavior Communicate frequently with employees about safety Perform pre-employment, post-job-offer physicals and background checks Contract with outside firms to do work employees not qualified, trained or equipped to perform

18. Containing Claim Costs Report claims to your carrier immediately! Implement a designated physician program Have written, detailed job descriptions Implement a return-to-work program Have incident review team complete their investigation and report to Safety Committee Stay in contact with the claims examiner Stay in contact with the treating physician Stay in contact with the injured employee

19. Contact us imwcainfo@iowaleague.org