The MCIT Board looked to the future and decided appropriate rate levels for coverage based on a report from MCIT’s actuary, Mark Doepke of Actuary Advisors, during its July 14 meeting. At the end of the presentation, the board voted to reduce rates for both workers’ compensation and property/liability coverage for 2018.
In developing rates, Doepke considers the historical cost of claims and costs associated with running MCIT not directly related to claims (e.g., building, equipment, staff and information/education) to project the amount of contribution necessary for the next year’s operation. Changes in reserves, new products/
services also influence rates.
DPPA Claims Factor Less for Property/Liability Rates
On the property and liability side, Doepke reviewed loss trends for the various lines of coverage (auto liability, auto physical damage, general liability, public employees liability, property and inland marine) suggesting that a rate reduction for 2018 is warranted. There was extensive discussion about the future of Driver’s Privacy Protection Act (DPPA) claims, which has affected the rating for the public employees liability line of coverage since 2014.
With a favorable outlook on the future of those claims, the board decided that no specific rate loading is necessary for the exposure and, therefore, agreed to an overall property/liability rate reduction of 6.2 percent for 2018. This reduction translates to nearly $1.1 million for the membership.
Workers’ Compensation Rates Decline, but Cost Depends on Payroll, Mod Factor
A member’s workers’ compensation contribution is the product of the amount of the organization’s payroll assigned to specific classification codes multiplied by that code’s individual rate times the members experience modification (mod) factor (payroll x classification code rate x mod factor = workers’ compensation contribution). MCIT uses 27 classification codes whose individual loss experience is analyzed by Doepke.
Although the rate for individual codes may increase or decrease by varying levels, the aggregate change in workers’ compensation rates for 2018 is a 6.5 percent reduction. The impact to individual members depends on changes to their annual payrolls and classification codes used, but the overall rate reduction should save members $1.8 million in contributions next year.
Exposures Are Increasing
Rateable exposures continue to rise across the membership year over year. Members, generally, are adding more employees, vehicles, buildings and equipment while maintaining if not increasing their scope of operations and services. The fact that MCIT is in a position to lower rates in the face of increased exposures is a reflection of the membership’s commitment to risk management, safety and participation in the claims management process.
Renewal contribution estimates will be mailed to members later this month pursuant to the MCIT Bylaws. Invoices will be mailed along with the 2018 Coverage Document and updated schedules of covered items in December. Members who have questions regarding their 2018 contribution should contact their MCIT member services representative at 1.866.547.6516.