W.C. Circular Letter No. 701
Retrospective Rating Article No. 194
Notice is hereby given that the Commissioner of Insurance has entered Commissioner's Order No. 00-1169 dated October 11, 2000 which adopted revised Texas workers' compensation classification relativities (classification relativities) and revised the table of expected loss rates in the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (the Basic Manual).
The Commissioner determined after public notice and a public hearing held on October 4, 2000 that revisions to the classification relativities and the Basic Manual were necessary to reflect more recent experience and changes that have occurred through the passage of time such as technological advances, improvement of safety programs and economic trends.
Description of the changes and rate level impact
· Classification Relativities:
The overall average level of the classification relativities have not changed. The new classification relativities have been balanced back to the level of the 1/1/2000 classification relativities. The Commissioner limited the classification relativity change of any given classification to +/- 25%.
· Expected Loss Rates:
The expected loss rates have decreased by 4.3% overall from the 1/1/2000 level based on the statewide distribution of business by classification. The Commissioner limited changes in individual expected loss rates to +/- 25%. The maximum impact will be for larger risks in classes where the expected loss rate decreased by 25%. In those cases, the experience modifier may increase by as much as 33%.
Actions Required by Carriers
All insurance companies must either use the revised classification relativities adopted by Commissioner's Order No. 00-1169 or their own individually developed and filed company-specific classification relativities for all workers' compensation policies written with an effective date on or after January 1, 2001. In other words, for policies with an effective date on or after January 1, 2001, insurance companies may no longer use the January 1, 2000 classification relativities as the basis of their rates. All rates must be based either on the January 1, 2001 classification relativities or on company-specific classification relativities that have been filed with the Texas Department of Insurance (TDI). Insurance companies that currently have company-specific classification relativities on file with TDI must use the revised 1/1/2001 classification relativities or make a new filing of company-specific classification relativities. Insurance companies may use the new classification relativities prior to January 1, 2001, provided they notify TDI on or before their selected effective date.
The revised expected loss rates must be used to calculate experience modifiers with an effective date on or after January 1, 2001. They may not be used to calculate an experience modifier with an effective date prior to January 1, 2001.
Copies of the tables of revised classification relativities and expected loss rates are available for downloading at TDI's website: www.tdi.state.tx.us. Look for Commissioner's Bulletin No. 0058-00 under "Bulletins" in the "Latest News" section of TDI's website home page. These are available in Excel and PDF formats.
Required Submissions from Companies
Companies that do not wish to change their deviations must complete the attached Notice of Carrier Intent and Certification to confirm the date they will start using the new classification relativities (it must be no later than January 1, 2001). Such a submission will not be considered to be a filing under §3(a) of article 5.55, Texas Insurance Code.
If a company elects to change its deviations (even if it is for only one class, you should answer yes to the question in the Notice of Carrier Intent attached), it will be considered to be a rate filing and the company will have to comply with the instructions for rate changes found in "Filings Made Easy" published by TDI. The company must also complete and include the attached Notice of Carrier Intent and Certification with the rate filing. Such a submission will be considered to be a filing under §3(a) of article 5.55, Texas Insurance Code.
Additional Submissions Required from Companies - Schedule Rating Plans
Companies are also required to submit a copy of their current schedule rating plan, if any. This should include a list of the criteria used in assessing debits and credits, the maximum debit or credit for each criterion, and the maximum overall debit or credit allowed under the plan. Carriers must complete and submit the attached schedule rating plan information sheet, regardless of whether or not they use schedule rating for workers' compensation insurance. Such a submission will not be considered to be a filing under §3(a) of article 5.55, Texas Insurance Code.
All rate filings should be submitted to:
Texas Department of Insurance
Property and Casualty Intake Unit (MC 104-3B)
P. O. Box 149104
Austin, TX 78714-9104
Filing requirements are listed in the Filings Made Easy manual at http://www.tdi.state.tx.us/company/rspceasy.html. Unless company is changing their deviation, no transmittal form or other exhibits listed in the Filings Made Easy manual need be included.
The following exhibits can be downloaded from TDI's website:
Exhibit A: Revised Classification Relativities
Exhibit B: Revised Expected Loss Rates and D-Ratios
Exhibit C: Determination of 1/1/2001 Expected Loss Rates and D-Ratios for Certain Selected 'a' Rated Classes.
Exhibit D: Expected Loss Rates for Classes that Were Merged Effective January 1, 1999
If you are unable to download the exhibits, hard copies can be requested. Contact Lisa Garza in the Property and Casualty Actuarial Section at 512-475-3017 or by e-mail at LISA.GARZA@TDI.STATE.TX.US.
For further information or questions in regard to this bulletin, contact Natali Teszler in the Property and Casualty Division at 512-305-6747 or by e-mail at NATALI.TESZLER@TDI.STATE.TX.US.
Sincerely,
Philip O. Presley
Chief Actuary
Property and Casualty Division
Attachments:
Notice of Carrier Intent
Schedule Rating Plan Information Sheet