RE: TDI Special Call for Workers' Compensation and Employers' Liability Average Schedule Rating Modifications and Negotiated Experience Modifiers
Pursuant to Texas Insurance Code §38.001, the Texas Department of Insurance (Department) requests that you provide the following data for workers' compensation and employers' liability experience in Texas. This data call applies to all companies in your group that write workers' compensation and employers' liability insurance on a direct basis in Texas. Separate data reports (Sections A and B) must be submitted for each company. A single Transmittal Form (Section C) may be submitted for all insurers in a group.
The data under this call should be submitted on a policy year basis for policy years 2001 - 2004. Where final payroll audits have not been performed, the average values should be based upon the estimated annual premiums. Although policy years 2003 and 2004 are only partial policy years, data is still requested for each one. For policy year 2004 report the experience for policies effective through March 31, 2004. Estimated annual premium should be reported. Experience reported should be for direct business only. No adjustments should be made to premiums for reinsurance ceded or assumed. Premium-weighted averages must be used in calculating the average schedule rating modifications and the average experience modifiers. Standard earned premium as defined in the Texas Workers' Compensation Financial Call Plan should be used.
Companies must complete both Sections A and B regardless of whether or not they have used schedule rating or negotiated experience modifiers.
Excluded Items
The following items should be excluded from this data call. These are the same items excluded from the Texas Workers' Compensation Financial Call Plan.
- Excess policies
- Policies with deductibles over $100,000 per accident or aggregate
- Experience on National Defense Projects written under either the old Comprehensive Rating Plan or the new National Defense Rating Plan
- All Underground Coal Mine experience
- Reinsurance policies
SECTION A - Average Schedule Rating Modifications
Section A must be completed by all carriers writing direct workers' compensation and employers' liability insurance in Texas in any of policy years 2001 - 2004. This information shall be reported by policy year and the indicated sizes of policy and shall reflect the premium-weighted average schedule rating modification for all policies written during the applicable policy year. The modification shall be expressed as a factor, where a factor of 1.000 implies an average schedule rating modification of zero. (Where schedule rating was not used for a given policy, use a factor of 1.000 in calculating the average.) An average schedule rating modification of -10.0% shall be reported as 0.900 and an average schedule rating modification of +15.0% shall be reported as 1.150. Carriers must also provide the number of policies and total premium for the indicated sizes of policy. The reporting format is similar to that required by Supplement S of the Texas Workers' Compensation Financial Call Plan and the Texas Call for Quarterly Experience.
SECTION B - Negotiated Experience Modifiers
Section B must be completed by all carriers writing direct workers' compensation and employers' liability insurance in Texas in any of policy years 2001 - 2004. The premium-weighted average experience modifier as calculated under the Rules in the Texas Workers' Compensation and Employers' Liability Manual, and the premium-weighted average experience modifier taking into consideration any policies with negotiated experience modifiers for each policy year must be provided. An example of the latter would be if there are 100 policies and 10 of them have negotiated experience modifiers. The average experience modifier considering negotiated experience modifiers would be a premium-weighted average of the calculated experience modifiers for the 90 policies and the negotiated experience modifiers of the 10 applicable companies. The modifier should be expressed as a factor (see example in Section A for more detail.) Also include standard premium prior to application of modifiers, the number of policies with negotiated experience modifiers, and the total number of written policies. In addition, provide a narrative (if the answer to all 3 questions on Section B is No then no narrative is needed) on how the negotiated experience modifiers have historically been used by the company and the extent of their current use, including changes in their use over time.
SECTION C - Transmittal Form
In addition to the data, please complete the attached transmittal form that identifies the following:
Organization(s) involved
Person responsible for the data
Contact information for any questions that may arise
Statement that data has been checked and the person responsible for the filing believes it to be correct
Only one transmittal letter is required for each group of companies.
Deadline, Submission Address, Submission Requirements and Contact Information
Responses are due to the Department no later than close of business on August 2, 2004. The reports should be provided to the Department in electronic format suitable for use on a personal computer. Acceptable formats include Microsoft Excel and Word files, or Lotus files. Other formats may be accepted with prior approval from TDI. Submissions may be mailed, express mailed, or emailed to TDI at one of the following:
Mail:
Texas Department of Insurance
P&C Actuarial, MC 105-5F
Attn: Elizabeth Buhro
P. O. Box 149104
Austin, TX 78714-9104
Express Mail:
Texas Department of Insurance
P&C Actuarial, MC 105-F
Attn: Elizabeth Buhro
333 Guadalupe
Austin, TX 78701
E-mail:
j'ne.byckovski@tdi.state.tx.us or elizabeth.buhro@tdi.state.tx.us
This Bulletin and attachments for Sections A - C can be downloaded from TDI's website at www.tdi.state.tx.us. The Bulletin and attachments can be found at www.tdi.state.tx.us by accessing "Popular Links" and then "Bulletins". In "Bulletins", click on "2004", and look for the Bulletin number. If you are unable to download the exhibits, you may request a hard copy by contacting Dolores Thompson in the Property and Casualty Actuarial Division at 512-475-3017 or by email at dolores.thompson@tdi.state.tx.us .
Sections A - C and a narrative accompanying Section B if required must be completed.
For further information or questions in regards to this bulletin, please contact either myself, J'ne Byckovski or Elizabeth Buhro at 512-475-3017.
___________________________________ PHIL PRESLEY
CHIEF PROPERTY & CASUALTY ACTUARY