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Workers' comp rates recap, February 2016

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Workers' comp rates recap, February 2016

receivedapproval for a rate decrease that affected $58.3 million in workers' compensationpremiums written in California, making it the most impactful rate decrease approvednationally in February, according to an S&P Global Market Intelligence analysisof more than 500 rate filings.

Fourdomestic units of the Australia-based P&C insurer lowered rates by percentagesranging from 8.94% to 13.86%. The rate filing was approved Feb. 1 and took effectMarch 1. The filing documentindicates that the calculated written premium decrease would be $6.5 million. QBEheld a 0.28% share of the California workers' comp market on the basis of $34.2million in direct premiums written in 2015, according to statutory data.Its underwriting volume declined significantly in 2015, as QBE had written $50.8million in workers' compensation premiums in California the year before.

Fourof the 10 most impactful workers' comp rate decreases in February were approvedin California, including those for three of the QBE subsidiaries. The Workers' CompensationInsurance Rating Bureau of California proposeda reduction in the advisory pure premium rates on Aug. 19, 2015. California InsuranceCommissioner Dave Jones then approvedadvisory pure premium rates that average $2.42 per $100 of employee payroll, accordingto an Oct. 20, 2015, press release.The new advisory rates were approved following a public hearing Sept. 22, 2015,and reflect a 2% decrease from the approved July 1 advisory pure premium rates of$2.47 per $100 of payroll.

Besidesthe California rate decreases, four notable rate cuts were approved in North Carolina.The most impactful was Erie IndemnityCo.-owned Erie Insurance Group's rate decrease approved on Feb. 18, which amounted to a calculatedpremium decrease of $2.6 million. Four Erie units will adopt new rates reflectingdecreases ranging between 5.30% and 14.60%, which will take effect April 1.

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. Five Florida rate filings wereapproved for workers' compensation in February, and only one had an impact on earnedpremiums. Sussex Insurance Co.on Feb. 3 received approval for a ratefiling that would impact $3,676 in earned premiums.

's9.20% Oklahoma rate increase was the single most impactful rate hike approved nationwidefor workers' comp during the month. The filingdocument indicates a calculated premium increase of $2.7 million, evenas the National Council on Compensation Insurance in September 2015 cutting 2016 workers' comp advisoryrates by 14.80%. The latest advisory rate reduction marked a cumulative 37.20% decreasein NCCI advisory rates in Oklahoma since 2014, according to a Sept. 3, 2015, .

Generally,each rate filing includes a simple calculation referred to as the "calculatedpremium change." This is simply the rate change multiplied by the amount ofpremium being impacted. It provides a rough estimate of the potential windfall theinsurer might receive in dollar terms from a rate increase. But it does not accountfor other 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.