Notice is hereby given that the Commissioner of Insurance has issued Commissioner's Order No. 01-0922 dated September 25, 2001 which adopted revised Texas workers' compensation classification relativities and revised the table of expected loss rates and discount ratios in the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (the Basic Manual).
SUMMARY CHECKLISTS OF REQUIRED SUBMISSIONS BY COMPANIES
The following items are required to be submitted to the Texas Department of Insurance (TDI). Additional information regarding these items and the timing of the submissions are explained more thoroughly later in this Bulletin.
· For companies with no change in their filed deviation:
· Notice of Carrier Intent and Certification
· Schedule Rating Plan Information Sheet
· Schedule Rating Plan if applicable
· For companies with a change in their filed deviation:
· Notice of Carrier Intent and Certification
· Schedule Rating Plan Information Sheet
· Schedule Rating Plan if applicable
· Filing forms and materials listed in "Filings Made Easy" published by TDI
Description of the changes and rate level impact
· Classification Relativities:
Because the overall average level of the classification relativities has not changed, they are revenue neutral, relative to the existing class relativities. That is, the new classification relativities have been balanced back to the level of the 1/1/2001 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 an average of 5.3% overall from the 1/1/2001 level based on the latest 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 Companies
All insurance companies must either use the revised classification relativities adopted by Commissioner's Order No. 01-0922 or file their own company-specific classification relativities for all workers' compensation policies written with an effective date on or after January 1, 2002. In other words, for policies with an effective date on or after January 1, 2002, insurance companies may no longer use the January 1, 2001 classification relativities as the basis of their rates. All rates must be based either on the January 1, 2002 classification relativities or on company-specific classification relativities that have been filed with TDI. Insurance companies that currently have company-specific classification relativities on file with TDI must use the revised 1/1/2002 classification relativities or make a new filing of company-specific classification relativities. Insurance companies may use the new classification relativities prior to January 1, 2002, provided they notify TDI on or before their selected effective date.
Insurance companies currently writing workers' compensation insurance that plan to continue writing that coverage in 2002 must send their submissions to TDI before January 1, 2002. Insurance companies that are not currently writing workers' compensation insurance but plan to write their first policy with an effective date on or after January 1, 2002, must send their submissions to TDI before the effective date of their first policy.
The actions by the companies are required pursuant to Article 5.55 and Section 38.001 of the Texas Insurance Code. Failure of companies to comply with the required actions within the time limits specified may constitute a violation or violations of the Texas Insurance Code and may subject the insurer to penalties provided by law.
The revised expected loss rates must be used to calculate experience modifiers with an effective date on or after January 1, 2002. They may not be used to calculate an experience modifier with an effective date prior to January 1, 2002.
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. 0045-01 under "Bulletins" in the "Quick Links" 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, 2002). Such a submission will not be considered to be a rate 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 rate filing under §3(a) of article 5.55, Texas Insurance Code.
Companies that are not currently writing workers' compensation insurance but plan to write their first policy with an effective date on or after January 1, 2002, must comply with the instructions for rate changes found in "Filings Made Easy" published by TDI. The Notice of Carrier Intent and Certification and the Schedule Rating Plan information Sheet and Certification are not required in this case.
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 rate filing under §3(a) of article 5.55, Texas Insurance Code.
All submissions should be sent 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 a company is changing their deviation, no transmittal form or other exhibits listed in the Filings Made Easy manual need to be included.
The following exhibits can be downloaded from TDI's website:
· Notice of Carrier Intent and Certification - WORD or PDF
· Schedule Rating Plan Information Sheet - WORD or PDF
· Exhibit A: Revised Classification Relativities - EXCEL or PDF
· Exhibit B: Revised Expected Loss Rates and D-Ratios - EXCEL or PDF
· Exhibit C: Determination of 1/1/2002 Expected Loss Rates and D-Ratios for Certain Selected 'a' Rated Classes - WORD or PDF
· Exhibit D: Expected Loss Rates and D-Ratios for Classes that Were Merged Effective January 1, 1999. - WORD or PDF
If you are unable to download the exhibits, hard copies can be requested. Contact Lisa Garza in the Property and Casualty Actuarial Division 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 J'ne Byckovski in the Property and Casualty Actuarial Division at 512-305-7527 or by e-mail at j'ne.byckovski@tdi.state.tx.us.
Sincerely,
Philip O. Presley
Chief Actuary
Property and Casualty Division
Attachments:
· Notice of Carrier Intent - WORD or PDF
· Schedule Rating Plan Information Sheet - WORD or PDF