Intending to recognize additional catastrophic exposures on workers’ comp systems that can impact ratemaking, the National Council on Compensation Insurance (NCCI) is proposing that any event exceeding $50 million in losses be excluded from the data used to set rates, including future pandemics.
Other than certified acts of terrorism, NCCI’s catastrophe provision only accounts for single-event losses in excess of $50 million that were caused by earthquakes, noncertified acts of terrorism or catastrophic industrial accidents.
The council’s filings for this season will address future pandemic losses with a two-prong approach:
Looking at the effect of the pandemic on future rates, NCCI is treating COVID-19 as a catastrophic event and will exclude pandemic-related claims when determining loss costs and rates. The council reported it is doing so because “those claims are not expected to be predictive of the loss experience that may arise during the upcoming loss cost and rating filings’ prospective periods.”
NCCI did report that it will evaluate each state on its own and consider whether any departures from its standard ratemaking methodologies are necessary. The council has started submitting annual jurisdiction-specific loss cost/rate experience filings, which will have proposed effective dates from November 2021 to August 2022.
Insurance departments in 35 states have designated NCCI as their licensed rating and statistical organization.
Source – PropertyCasulaty360.com