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NCCI s 2017 Data Educational Program Collaborating for Data Reporting Success Introduction to Financial Call Data Reporting January 31 February 3, 2017 Palm Beach County Convention Center West Palm Beach,
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NCCI s 2017 Data Educational Program Collaborating for Data Reporting Success Introduction to Financial Call Data Reporting January 31 February 3, 2017 Palm Beach County Convention Center West Palm Beach, FL Introduction to Financial Call Data Reporting Presented by: Brian Barnett, Jo Anne Malik, and Roody Berger Objective Learn the basics of Financial Call Reporting adhere to data rules and requirements, follow the recommended workflow, and utilize the Financial Call Reporting Guidebook. 2 1 Agenda Collection and Use of Financial Call Data Premium Categories General Reporting Requirements Financial Data Calls Financial Call Components Calls 8, 19, 31, and 10 Recommended Workflow 3 Collection and Use of Financial Call Data 2 What Is Financial Data? Calendar Year Policy Year Calendar- Accident Year Aggregated (Summarized) 5 What Is Financial Call? Not a phone call A request for financial data 6 3 Financial Data Validators Validate Explanations Compare Trends Edits Support Accurate 7 Financial Call Resources Financial Call Reporting Guidebook Edit Matrix Data Quality Guidebook Financial Call Season Web Article Webinars on Demand Financial Data Collection Tool Data Educational Programs Materials 8 4 Financial Call Reporting Guidebook Part # 9 Data Quality Guidebook 10 5 Financial Call Season Web Article 11 Financial Call Season Web Article 12 6 Financial Call Season Web Article 13 Learning Center 14 7 Learning Center 15 How Is Financial Data Reported? 16 8 What Does NCCI Collect? 22 Aggregated Financial Calls Categorized and Grouped Primary Ratemaking Calls Supplemental Ratemaking Calls Premium Based Billing and Residual Market Calls State Specific Calls Compliance Forms 17 How Is Financial Data Used? At the State Level: NCCI uses the data for ratemaking purposes Also Supports: Overall market analysis and research Response to state regulatory requirements 18 9 Premium Categories Premium Categories Part 5 Loss Costs Rates Combined Relativities 20 10 Loss Cost States Part 5 Also referred to as competitive pricing states: Loss Costs Loss Cost Multiplier Rate Publish loss costs (pure premiums) to cover indemnity (lost wages) and medical benefits Generally, loss costs do not cover expenses Carriers can file a loss cost multiplier (LCM) Loss Cost States Part 5 Alabama Alaska Arkansas Colorado Connecticut District of Columbia Georgia Hawaii Kansas Kentucky Louisiana Maine Maryland Mississippi Missouri Montana Nebraska Nevada North Carolina South Dakota Oklahoma Oregon New Hampshire Rhode Island New Mexico South Carolina Tennessee Utah Vermont Virginia West Virginia 22 11 Rate States Part 5 Also called administered pricing states: Arizona Florida Idaho Iowa Publish full rates to cover all indemnity (lost wages) and medical benefits, as well as expenses Rate deviations must be filed/approved 23 Combined States Part 5 Combined (rates/loss cost) states: Illinois Indiana Publish both rates and loss costs, but the carrier decides which to use as the basis for its company rates 24 12 Relativities State Part 5 Texas Texas Department of Insurance Relativities Publishes relativities, which are a set of indices between classes NCCI State-Approved Loss Costs Carriers have the option to use the loss costs 25 All States Part 5 WA MT ND MN VT ME OR SD ID WI WY NH NE IA MI NY MA NV RI IL UT CO IN OH PA CT KS MO WV NJ KY VA DE CA OK TN DC AZ NM AR NC MD TX LA MS SC AL GA NCCI Loss Cost AK HI FL NCCI Combined Loss Cost/Rates NCCI Rates NCCI Loss Cost/Rate Relativities Independent Bureaus Monopolistic 26 13 Review Question #1 How does NCCI use financial data? 27 Review Question #2 What are the four premium categories/pricing mechanisms? 28 14 Review Question #3 What two states have combined rates/loss costs? 29 Review Question #4 Which of the pricing mechanisms covers both losses and expenses? 30 15 General Reporting Requirements Financial Calls Part 4 Calls are reported on a carrier group level. Group Company Company Company Exception: Texas is reported at the company level General Experience Types Part 6 & 9 Inclusions All workers compensation experience unless noted as an exclusion Exclusions Experience you would generally exclude from the ratemaking Calls 33 Excluded Experience Part 6 & 9 Exclusions for ratemaking Calls: Underground coal mine classifications (including disease codes, e.g., black lung) For Virginia, also exclude surface coal mine Excess workers compensation policies Federal classifications however: Include any USL&HW experience associated with industrial classifications Maritime and other Federal Employer Liability Act (FELA) classifications for policies effective 1/1/03 and subsequent 34 17 Excluded Experience (cont d) Part 6 & 9 More exclusions for ratemaking Calls: National Defense Projects Rating Plan Reinsurance Assumed Catastrophe and Terrorism Provision Premium (Statistical Codes 9740, 9741, or 9752) Large Deductible Policies Except for Calls 20, 21, and 31 where large deductible experience is reported for Florida 35 Excluded Experience Guidebook Example Part Financial Call Data Collected Part 6 & 9 Data Valued as of 12/31 31 Policy Years 30 Calendar Accident Years Summary Row for All Prior Years Continued Expansion of Specific Ratemaking Calls COMPLETE 37 Call 3 Call 5 Policy Year: 31 Years Calendar Accident Year: 30 Years 38 19 Financial Call Type Policy Year Part 4 Premiums and losses for all policies with effective dates within that year Example: Policies with effective dates January 1 to December 31, 2015: Premium earned for those policies For all claims that develop for these policies, report under Policy Year Policy Year Example Example Policies Policy A: 1/1/ /31/2014 (Accident 6/15/2014) Premium = $1,000 Policy B: 10/1/ /1/2015 (Accident 1/30/2015) Premium = $1,200 12/31/2014 Premium Losses Policy A Policy B (10/1 12/31) 12/31/2015 Premium Losses Policy A Policy B (10/1 10/1) 40 20 Financial Call Type Calendar/Accident Year Part 4 Premiums earned within a calendar year and losses with accident dates occurring in that calendar year. Example: For Calendar/Accident Year 2015, include: Premium earned during 2015 Claims with accident dates occurring in Calendar/Accident Year Example Example Policies Policy A: 1/1/ /31/2014 (Accident 6/15/2014) Premium = $1,000 Policy B: 10/1/ /1/2015 (Accident 1/30/2015) Premium = $1,200 12/31/14 Premium Losses Policy A Policy B (10/1 12/31) 12/31/15 Premium Losses Policy A Policy B (10/1 12/31) Policy B (1/1 9/30) 42 21 Policy Year vs. Calendar/Accident Year Example Example Policy Policy C: 6/1/2015 6/1/2016 (Accident 3/1/2016) Premium = $2,400 Policy Year 12/31/2016 Premium Losses Policy C (6/1 6/1) Calendar/Accident Year 12/31/16 Premium Losses Policy C (6/1 12/31) Policy C (1/1 6/1) 43 Why Both Types of Calls? Verify the consistency of the data: Policy year vs. calendar-accident year the way the data is arranged and summarized Calendar year totals should reconcile between the policy year and calendar-accident year Calls Both Call types: historical data on earned premium, losses, claim counts, and expenses Used for analysis: loss ratios and emerging claim patterns/trends PY C/AY 44 22 Financial Call Market Types Assigned Voluntary Statewide Risk Voluntary Market Pertains to insureds that (are able to) obtain coverage through insurance companies Assigned Risk Market Pertains to insureds that cannot acquire insurance in the voluntary market and must obtain coverage through a state-assigned risk plan or pool 45 Financial Data Calls 23 Primary Ratemaking Calls Part 4 3 Policy Year 3A Policy Year Assigned Risk Policy Year Calls 20 Policy Year Large Deductible (FL only) 32A Virginia Coal Mine Policy Year Assigned Risk 32V Virginia Coal Mine Policy Year Voluntary 47 Primary Ratemaking Calls Part 4 5 Calendar Accident Year Calendar Accident Year Calls 5A Calendar Accident Year Assigned Risk 21 Calendar Accident Year Large Deductible (FL Only) 48 24 Primary Ratemaking Calls Part 4 8 Reconciliation Report 31 Large Loss and Catastrophe Call 33 VA Coal Mine Large Loss and Catastrophe Call 49 Supplemental Ratemaking Calls Part 4 6 Insurance Expense Exhibit (IEE) 10 Schedule Rating and Other Prospective Premium Adjustments 19 Accident Year Countrywide Loss Adjustment Expense 50 25 Premium-Based and Residual Market Calls Part 4 1 Calendar Year Call for Workers Compensation Net Direct Written Premium 1A Calendar Year Call for Direct Assignment Net Direct Written Premium 1B Calendar Year Alternate Equivalent Premium 1C Calendar Year Kansas Municipalities Premium Exclusion 1D Calendar Year New Mexico Small Policy Exemption 51 State-Specific Calls Part 4 10T TX Policy Year Call for Schedule Rating Modifications 14 Calendar Year Expense (AZ, NC, and VA) 26 NC Addendums for Calls 3, 5, and Compliance Forms Self Audit Form Acknowledgment Form Part Call Reporting Requirements Part 4 You are required to report Call 3 if you wrote workers compensation policies in a given state in 1986 and/or any subsequent years What Do You Need to Report? Part 9 55 Call Due Dates Part 2 Form/Call Form/Call Name Due Date Form Acknowledgment 4/1* Form Self Audit 4/1 1 Calendar Year Call for Workers Compensation Net Direct Written Premium 5/1 1A Calendar Year Call for Direct Assignment Net Direct Written Premium 3/15 1B Calendar Year Alternate Equivalent Premium Call 3/15 1C Calendar Year Kansas Municipalities Premium Exclusion Call 3/15 1D Calendar Year New Mexico Small Policy Exemption Call 3/15 3 Policy Year Call 4/1 3A Policy Year Assigned Risk Call 4/1 5 Calendar Accident Year Call 4/1 5A Calendar Accident Year Assigned Risk Call 4/1 6 Insurance Expense Exhibit (IEE) 4/1* *Submitted hard copy 56 28 Review Part 5 What are the two compliance forms collected? True or False: Excess workers compensation policy experience is included in Call 3 Policy Year True or False: All Calls are due April 1 Statewide data = and 57 Financial Call Components 29 Reporting Requirements Part 5 Report to the state of exposure Report on a direct basis Valued as of December Call Components Premiums Losses Claim Counts Expenses 60 30 Parts 5 & 7 Premiums Earned Premium Types Part 5 Designated Statistical Reporting (DSR) Level Company Standard Level Net 62 31 DSR Level Premium Parts 5 & 7 As though business was written at NCCI-filed and state-approved loss cost or rate levels Includes NCCI s experience rating modifications Benchmark level premium Used by NCCI for ratemaking 63 Company Standard Premium Part 5 At company rates Includes NCCI s experience rating modifications Prior to the application of risk-specific adjustments Helps in verifying the accuracy of DSR premium 64 32 Net Premium Part 5 After the application of all adjustments Includes NCCI s experience rating modifications Should reconcile to earned premium reported on National Association of Insurance Commissioners (NAIC) Annual Statement (state page data) 65 Financial Call Premium Call 3 Call Calculating DSR Level Premium Part 7 Two approaches: Extending exposures Deriving DSR level premium from company standard premium 67 DSR Level Premium Other Considerations Part 7 Combined Rate and Loss Cost States Illinois and Indiana DSR level is rates Relativity State Texas DSR level is relativities or loss costs 68 34 Premium Components Summary Chart Part 5 69 Active Deviations The effective date of your filed LCM/deviation from rates The effective date of NCCI s rate or loss cost filing The filed LCM/deviation minus ( ) A rolling multiplier (Y) indicates that you automatically adopt NCCI s rate or loss cost filing on the date it is effective 70 35 Losses Reporting Losses Part 5 Indemnity Medical Replacement of lost wages Medical care related to on the job injury 72 36 Paid Losses and Case Reserves Include loss amounts from medical-only claims on the Calls Paid Monies paid by insurance company for claims Case Monies set aside for future payments on specific claims 73 Reporting Losses Other Items Part 5 Subrogation Employers Liability (Part II) Coverage Independent Medical Exam Deductible Reimbursements Lump-Sum Settlements 74 37 Reporting Losses Other Items Subrogation A type of loss recovery for a carrier where losses paid are recovered from a third party Paid losses Reduced for actual subrogation amount Case reserves Can be offset by anticipated subrogation recoveries Part 5 75 Reporting Losses Other Items Losses Employers Liability (Part II) Coverage Defense and Cost Containment Expense (DCCE) associated with employers liability (Part II) coverage should be included with indemnity losses and not reported as a loss adjustment expense. Part Reporting Losses Other Items Independent Medical Examination (IME) If required by an industrial board or commission, report as a medical loss If not required by an industrial board or commission, report as DCCE Part 5 77 Reporting Losses Other Items Deductible Reimbursements Reported on a gross basis except in Kentucky, which is net Lump-Sum Settlements Allocate accordingly to indemnity and medical 78 39 Paid Losses and Case Outstanding Call 3 79 Claim Counts 40 Call 3 Indemnity Claim Counts Part 5 Incurred Indemnity Claim Count (8) Incurred Indemnity Claim Count Indemnity payment of at least $1 or Outstanding indemnity reserve of at least $1 81 Claim Count Reporting Part 5 Include Claim could have both indemnity and medical losses Indemnity claims that are open, closed, or reopened Indemnity claims for Policy Year 1993 and subsequent for all states Texas exception Policy Year 2007 and subsequent 82 41 Claim Count Reporting Exclude Part 5 Medical only claims Claims closed with no payment Defense and Cost Containment Expense (DCCE) only claims 83 Closed Claim Counts Part 5 An indemnity claim paid in full with no reserves A claim closed on the prior valuation, but reopened as of the current valuation, must be removed from Column Open Claim Counts Part 5 Indemnity claims with outstanding case or Defense and Cost Containment Expense (DCCE) reserves Closed claims (Column 9) + open claims (Column 10) = incurred claims (Column 8) 85 Claim Count Remember: Closed Claims Open Claims Incurred Claims 86 43 Expenses Expenses Defense and Cost Containment Expenses (DCCE) Loss adjustment expenses for: Defense by the coverage provider (whether a first-party or third-party claim) for litigation involving a claim Cost containment Part DCCE Expenses Examples: Surveillance Litigation management Fixed amounts for cost containment Fees or salaries for appraisers, private investigators, hearing representatives, re-inspectors, and fraud investigators only if working in defense of a claim Attorney fees (to defend) Part 5 Exclude Adjusting and Other Expenses (AOE), such as fees of adjusters/settling agents (but not if a contentious defense) and attorney fees used in determining coverage 89 DCCE Expenses Part 5 Report DCCE paid and case Required for all states except Texas, PY 1994 and subsequent Required for Texas, PY 2006 and subsequent Call Calls 8, 19, 31, and 10 Call 8 Reconciliation Report Reconciles the calendar year data reported to NCCI with the data reported on the carrier s NAIC Annual Statement, Statutory Page 14 Consists of calendar year direct premiums earned, direct losses (paid and incurred), and Direct Defense Cost and Containment Expenses (DCCE) paid Part Call 5 Call 8 Reconciliation Report Call 8 Line (1) comes directly from Calendar-Accident Year Call 5: Call 8 93 Call 8 Other Reconciliation Items Part 9 Excluded from NCCI Financial Call 5: Federal (F)-Classifications Maritime and Other FELA Classifications Underground Coal Mine Classifications National Defense Projects Large Deductible Experience 94 47 Call 8 Reconciliation Items Part 9 Excluded from NCCI Financial Call 5: Small deductibles losses and expenses only (difference between gross and net, except KY [a subtraction item]) Excess policies Loss assessments (those excluded from losses reported to NCCI) Catastrophe premium (i.e., TRIA and DTEC) 95 Call 8 Reasons for Difference Part 9 Possible Reasons for Difference: Grouping differences affiliates list Earned But Unbilled Premium (EBUB) not reported in the policy year or calendar-accident year Calls Reasons for Difference are addressed on lines Note: Reasons for Difference explanation is not necessary if the difference is between: +/ $5,000 for Premiums/Losses +/ $50,000 DCCE 96 48 Call 8 Example 97 Call 19 Accident Year Countrywide Loss Adjustment Expense To collect accumulated accident year loss and loss adjustment expense (LAE) information Reported to NCCI on a direct basis (with respect to reinsurance) for the purpose of calculating the LAE provision included in rates or loss costs The Losses and LAE Prior to Line amount on this Call will not match the Prior Line amount on your company s NAIC Annual Statement (Schedule P, Part 1D) for those loss types reported on an incremental basis 98 49 Call 19 Accident Year Countrywide Loss Adjustment Expense Unlike NCCI s Primary Ratemaking Calls, this includes all experience types, such as: Federal (F)-classifications Large Deductible policies Maritime FELA Countrywide Call Includes all 50 states and District of Columbia 99 Call 31 Large Loss and Catastrophe Call Provides the necessary claim detail to treat large losses and Extraordinary Loss Event (ELE) catastrophes in aggregate ratemaking at the state level Includes all claims for Accident Year 1984 and later, where total incurred losses are equal to or greater than $500,000 at the time of valuation; excludes DCCE payments and reserves Open, closed, or reopened claim status Part Call 31 Large Loss and Catastrophe Call Includes ELE claims that are assigned unique catastrophe numbers: Call 31 includes Catastrophe Numbers 14, 28, 48, 77, 87, 93, and 98 Do not report ELE or large loss claims when part of a large deductible policy Exception: Florida Part Call 31 Large Loss and Catastrophe Call A separate submission is required for each state Texas does not report this Call Subset of Calls 3, 3A, 5, 5A, 20, and 21 Report on a consistent basis with the policy year and calendar-accident year Calls Part Call 31 Example The three market types reported within this Call are: 0 Assigned risk (other than large deductible) 2 Large deductible (Florida only) 3 Voluntary (other than large deductible) Claim status is reported as one of the following: 0 Open 1 Closed 2 Reopened Part Call 10 Schedule Rating and Other Prospective Premium Adjustments Call Call 10 Policy year accumulated earned schedule rating adjustment for the most current five years Report adjustments at a company rate level Part Review Where does the first line of values on Call 8 come from? What is the purpose of Call 8? What amount of incurred losses constitutes a large loss? 105 Recommended Workflow 53 Workflow Benefits Part 3 The recommended workflow assists you in reporting your data in two ways: 107 Workflow Steps Part 3 Review Expected Calls in DMD Review/Update Deviation Information Create Calls and Self Audit Form Perform Initial Validation Address Edit Log Revalidate Calls Submit Calls Submit Self Audit Form Submit Acknowledgment Form Workflow Flowchart Part Viewing Expected Calls in DMD Part 4 Your expected Calls and forms are available for viewing in Data Manager Dashboard Notify your financial data validator if any Calls or forms should be removed or added from the Calls expected listing Active Deviation Review Review and Update Deviation/ Loss Cost Multiplier Information Essential for DSR Level Premium accuracy Financial data validator must make entries for prior policy years 111 Active Deviation Example Update Active Deviation Loss Cost Multiplier = Call Creation Part 3 Create Financial Calls and Self-Audit Form 113 Call Creation Example Call Validation Part 3 Validate Financial Call data 115 Call Validation Part 3 Edit Matrix Sample Edit Call Validation Example 117 Edit Review Part 3 Review Edit Log Are there edits? YES Correct Call data or provide explanations NO Edit Review Edit Log within F
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