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Workers' comp rates recap, March 2016


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Workers' comp rates recap, March 2016

and receivedapproval for rate increases on their workers' compensation business in New York,both of which were among the most impactful rate increases approved nationally duringthe month of March, according to an S&P Global Market Intelligence analysisof more than 600 rate filings.

ArchCapital unit Arch Insurance Co.submitted a rate filingto the New York State Department of Financial Services on Oct. 21, 2015, requestinga rate increase of 18.2%. The new rate would affect $18.8 million in workers' comppremiums written in New York, and the effective date requested by Arch Insurancewas Feb. 1 for both new and renewal policies. Arch had requested to revise its losscost multiplier to 1.464 from 1.239. The department responded by asking Arch toadjust its loss cost multiplier downward, as the maximum approvable loss modifieris 10%, according to the filing document.

WhileArch stated that it "does not believe limiting the loss modifier to a 10% maximumis actuarially sound or justified," it reduced its proposed loss cost multiplierto 1.340, which was then approved by the department on March 11. The resulting 8.2%rate increase approved by the state commissioner would lead to a calculated writtenpremium increase of $1.5 million, and the new rate will now take effect June 1.Arch Capital collectively wrote $30.6 million in workers' comp premiums in 2015,translating into a 0.55% share of the New York market, according to statutory data.

BerkshireHathaway subsidiary National Liability& Fire Insurance Co. received approval for a 10.4% rate increasein New York on March 15, resulting in a calculated written premium increase of $981,107,according to a filing document.National Liability & Fire increased its loss cost multiplier to 1.54, whichwill impact $9.4 million in written premiums with effect from April 1. The approvedrate increase of 10.4% is well above the 5.9% advisory rate increase by the New York CompensationInsurance Rating Board that took effect Oct. 1, 2015. Berkshire Hathaway collectivelywrote $155.0 million in workers' compensation premiums in New York in 2015, makingit the eighth-largest underwriter in the state with a 2.81% market share, accordingto statutory data.

The analysisin the above chart excludes the excess workers' compensation subtype (16.0003).Rate filings for Ohio are not included in the analysis because they do not becomeavailable until they are in effect. Rate filings for Florida also are excluded,as the disposition information contained in them is not according to the uniformSystem for Electronic Rate and Form Filing format. Florida includes only earnedpremiums in its filings instead of written premiums. Three Florida rate filings wereapproved for workers' compensation in March, and none had an impact on earned premiums.

received approval for themost impactful rate decrease during March. It lowered workers' comp rates by 9.5%in Texas, which impacted a combined $294.4 million in workers' compensation premiumsfor the nine units affected. The collective calculated written premium decreasewas $28.0 million, led by decreases of $14.2 million and $13.6 million for and ,respectively.

Californiastands out on the lists of both notable rate increases and decreases approved inworkers' compensation during March. Nine subsidiaries of The Hartford Financial Services Group Inc. received approvalto collectively cut rates on California workers' compensation with effect from May1. The collective written premium impact is estimated at $14.1 million, affecting87,340 policyholders and $525.8 million in written premiums, according to the . One of the nineunits, Property and Casualty InsuranceCo. of Hartford, actually raised rates by 2.7%, leading to an increaseof more than $885,000 in calculated written premiums. The Hartford wrote $654.1million in workers' compensation premiums in California in 2015, making it the sixth-largestunderwriter in the state with 5.30% of the market, according to statutory data.

Generally,each rate filing includes a simple calculation referred to as the "calculatedpremium change." This is the rate change multiplied by the amount of premiumbeing impacted. It provides a rough estimate of the potential windfall the insurermight receive in dollar terms from a rate increase, but it does not account forother factors such as customer attrition due to higher rates.

S&PGlobal Market Intelligence lists the rate changes with the largest calculated premiumchange in both positive and negative directions.

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SNL offers a variety of tools to analyze the rate and product filings of insurance companies. Click here to find out more about the Insurance Rate & Product Filing subscription.

Click here for a template providing rate changes for a selected entity, state or type of insurance over a selected time period using interpretive charts and histogram. With this template, one can also view information on each filing along with key metrics related to premiums, approval time and affected policyholders.

Click here for a webinar with information on the resources SNL has available regarding rate filings.