Basics of Financial Call Data Reporting€¦ · Palm Beach County Convention Center ... Basics of Financial Call Data Reporting Presented by: ... NCCI State-Approved Loss Costs

Basics of Financial CallData Reporting

NCCI’S 2016 DATA EDUCATIONAL PROGRAM

January 26–29, 2016

Palm Beach County Convention CenterWest Palm Beach, FL

1

© Copyright 2016 National Council on Compensation Insurance, Inc. All Rights Reserved.

Basics of Financial Call Data Reporting

Presented by: Ashley Jomant and Brian Barnett


2016 DATA EDUCATIONAL PROGRAM

Objective

2

2



Agenda

3

Collection and Use of Financial Call DataCollection and Use of Financial Call Data

Premium CategoriesPremium Categories

General Reporting RequirementsGeneral Reporting Requirements

Financial Data Call ComponentsFinancial Data Call Components

Calls 8, 31, and 10Calls 8, 31, and 10

Recommended WorkflowRecommended Workflow

Resources and ToolsResources and Tools



Collection and Use of Financial Call Data

3


2016 DATA EDUCATIONAL PROGRAM5

Claim/Policy Information

Calendar Year/ Accident Year

Policy YearAggregated

(Summarized) by State

Aggregated (Summarized)

by State

What Is Financial Data?



What’s going on here?

Who Are Financial Data Validators?

4



Easy to

Easy to

FormatFormatEasy to

Easy to

ViewView

Easy to

Easy to

AccessAccess

What Is a Financial Call?



Primary Ratemaking Calls


Supplemental Ratemaking CallsSupplemental

Ratemaking Calls

Premium‐Based Billing and

Residual Market Calls

Premium‐Based Billing and

Residual Market Calls

State‐Specific CallsState‐Specific Calls Compliance FormsCompliance Forms

• 22 Aggregated Financial Calls • Categorized and Grouped

What Does NCCI Collect?

5



At the State Level: NCCI uses the data for

ratemaking purposes

Also Supports: Overall market analysis and

research Response to state regulatory

requirements

How Is Financial Data Used?



Premium Categories

6



Premium Categories

11

Loss CostsLoss Costs

RatesRates

CombinedCombined

RelativitiesRelativities

Part5



(also referred to as competitive pricing states):

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)

12

Part5

Loss Cost States

7



Alabama Alaska Arkansas Colorado Connecticut

District of Columbia Georgia Hawaii Kansas Kentucky

Louisiana Maine Maryland Mississippi Missouri

Montana Nebraska Nevada New Hampshire New Mexico

North Carolina Oklahoma Oregon Rhode Island South Carolina

South Dakota Tennessee Utah Vermont Virginia

West Virginia

Part5

31 Loss Cost States:



(also called administered pricing states):

Publish full rates to cover all indemnity (lost wages) and medical benefits, as well as expenses

Rate deviations must be filed/approved

Arizona Florida Idaho Iowa

Part5

Rate States

8



Combined (rates/loss cost) states:

Publish both rates and loss costs, but the carrier decides which to use as the basis for its company rates

15

Illinois Indiana

Part5

Combined States



Relativities State

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

16

Texas

Part5

9



NCCI Combined Loss Cost/Rates

NCCI Rates

AK HI

NCCI Loss Cost

MT ND MNWA

OR ID WYSD

NV

CA

UT

AZ NM

CO

NE

KS

OK

TX

IA

MO

AR

LAMS AL GA

FL

SCNC

WI

IL IN PA

NY

ME

KYTN

WVVA

VT

NHMA

RICT

NJ

MD

DEDC

MI

Independent Bureaus

NCCI Loss Cost/Rate Relativities

Monopolistic

Part5

All States

OH



Review How does NCCI use the financial data that is

reported?

What are the four premium categories/pricing mechanisms?

What two states are combined states?

Which of the following covers both losses and expenses: loss costs or rates?

18

Part5

10



General Reporting Requirements



Calls are reported on a carrier group level.

Exception: Texas is reported at the company level.

GroupGroup

CompanyCompany CompanyCompany CompanyCompany

Part4Financial Calls

11



Inclusions

All workers compensation experience unless noted as an exclusion

Exclusions

Experience you would generally exclude from the ratemaking Calls

Parts6 and 9General Experience Types



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

22

Excluded Experience Parts6 and 9

12



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

23

Excluded Experience (cont’d) Parts6 and 9



Excluded ExperienceGuidebook Example

Part6

13



Data Valued as of 12/31

Continued Expansion of Specific

Ratemaking Calls

Summary Row for All Prior Years

29 Calendar‐Accident Years30 Policy Years

Financial Call Data Collected Parts6 and 9



Policy Year: 30 Years

Calendar‐Accident Year:

29 Years

26

Call 3 Call 5

14



Policy Year

Premiums and losses for all policies with effective dates within that year

Example:Policies with effective dates January 1 to December 31, 2014:• Premium earned for those policies• For all claims that develop for these policies,report under Policy Year 2014

Financial Call Types Part 4



Financial Call Types

28

Calendar-Accident Year

Premiums earned within a calendar year and losses with accident dates occurring in that calendar year

Part4

Example: For Calendar‐Accident Year 2014, include:• Premium earned during 2014• Claims with accident dates occurring in 2014

15



2013 2014 20156/1/13 5/31/14

Policy Year vs. Calendar Year

Policy year is 2013

29



2013 2014 2015

2013 2014 2015


1/1/13 6/1/13 12/31/13

30

16



2013 2014 2015

Policy Eff. Date Range

2013 2014 2015Policy Exp. Date Range

A claim made on 5/1/14, on a policy effective 12/31/13, would be reported under the policy year.

A claim made on 5/1/14, on a policy effective 12/31/13, would be reported under the calendar/accident year.


(eff. 12/31/13)

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2013 20152014

2013 2014 2015Policy Exp. Date Range

Premium transactions on a policy with effective date 1/1/13 would bereported under the calendar/accident year.

Premium transactions on a policy with effective date 6/1/13 would bereported under the calendar/accident years.


For data valued as of 12/31/15:

1/1/2013 6/1/2013

32

17



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

33

PYPY C/AYC/AY



Financial Call Market Types

34

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

VoluntaryAssigned Risk

Statewide

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Financial Data Calls




36

Policy Year Calls

3—Policy Year

3A—Policy Year—Assigned Risk

20—Policy Year LargeDeductible (FL only)

32A—Virginia Coal MinePolicy Year—Assigned Risk

32V—Virginia Coal MinePolicy Year—Voluntary

Part4

19




37

Calendar‐Accident Year Calls

5—Calendar‐Accident Year

5A—Calendar‐Accident Year—Assigned Risk

21—Calendar‐Accident YearLarge Deductible (FL Only)

Part4




38

8—Reconciliation Report

31—Large Loss andCatastrophe Call

33—VA Coal Mine Large Lossand Catastrophe Call

Part4

20



Supplemental Ratemaking Calls

39

6—Insurance Expense Exhibit (IEE)

10—Schedule Rating and Other Prospective Premium Adjustments

19—Accident Year Countrywide Loss Adjustment Expense

Part4



Premium-Based and Residual Market Calls

40

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

Part4

21



State-Specific Calls

41

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 19

Part4



Compliance Forms

42

Self‐Audit FormSelf‐Audit Form

Acknowledgment Form

Acknowledgment Form

Part11

22



Call Reporting Requirements

43

Part4

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?

44

Part9

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Call Due Dates

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Part2

*Submitted hard copy

Form/Call Form/Call Name Due Date

Form Acknowledgment 4/1*

Form Self‐Audit 4/1

1Calendar Year Call for Workers Compensation Net Direct Written Premium 5/1

1ACalendar 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*



Review

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 ___________

46

Part5

24



Financial Call Components



Report to the state of exposure

Report on a direct basis

Valued as of December 31

Reporting Requirements

48

Part5

25



Call Components

49

PremiumsPremiums LossesLosses

ExpensesExpensesClaim CountsClaim Counts



Premiums

Parts5 and 7

26



Earned Premium Types

Designated Statistical Reporting (DSR) LevelDesignated Statistical Reporting (DSR) Level

Company Standard LevelCompany Standard Level

NetNet

51

Part5



DSR Level Premium

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

52

Parts5 and 7

27



Company Standard Premium

At company rates


Prior to the application of risk-specific adjustments

Helps in verifying the accuracy of DSR premium

53

Part5



Net Premium

54

Part5

After the application of all adjustments


Should reconcile to earned premium reported on National Association of Insurance Commissioners (NAIC) Annual Statement (state page data)

28



Call 5Call 5Call 3Call 3

Financial Call Premium

55



Calculating DSR Level Premium

Two approaches:

56

Part7

Extending exposures Deriving DSR level premium from company standard

premium

29



DSR Level Premium—Other Considerations

Combined Rate and Loss Cost States Illinois and Indiana—DSR level is rates

Relativity State Texas—DSR level is relativities or loss costs

57

Part7



Premium Components Summary

58

Part5

30



Active Deviations

59

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 1.000

(1.230 – 1.000)

A rolling multiplier (Y) indicates that you automatically adopt NCCI’s rate or loss cost filing on the date it is

effective



Part5

Losses

31



Part5

Indemnity Medical

Reporting Losses

61

Replacement of lost wages

Medical care related to on‐the‐job injury



Paid Losses and Case Reserves

62

Paid • Monies paid by insurance company for claims

• Monies set aside for future payments on specific claimsCase

Include loss amounts from medical‐only claims on the Calls

32



Reporting Losses—Other Items

63

SubrogationSubrogationEmployers

Liability (Part II) Coverage

Employers Liability (Part II)

Coverage

Independent Medical ExamIndependent Medical Exam

Deductible Reimbursements


Lump-Sum SettlementsLump-Sum Settlements

Part5




64

Paid losses—Reduced for actual subrogation amount

Case reserves—Can be offset by anticipated subrogation recoveries

Subrogation A type of loss recovery for a carrier where

losses paid are recovered from a third party

Part5

33




65

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.

Losses—Employers Liability (Part II) Coverage




66

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

Independent Medical Examination (IME)

34




67


Lump-Sum Settlements

Reported on a gross basis, except in Kentucky, which is net

Allocate accordingly to indemnity and medical



Paid Losses and Case Outstanding

68

Call 3Call 3

35



Part5

Claim Counts



Indemnity Claim Counts

70

Indemnity payment of at least $1 or Outstanding indemnity reserve of at least $1

Part5

Call 3Call 3Incurred

Indemnity Claim Count (8)

Incurred Indemnity Claim

Count (8)

36



Claim Count Reporting

71

IncludeInclude

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

Part 5

Claim could have both indemnity and

medical losses



Claim Count Reporting

72

Exclude

Medical‐only claims

Claims closed with no payment

Defense and Cost Containment Expense (DCCE) only claims

Part 5

37



Closed Claim Counts

73

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 9

Part5

Call 3

AccumulatedClosed (Paid)

(9)



Open Claim Counts

74

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)

Part5Call 3Call 3

Open(Outstanding)

(10)

38



Claim Count

75

Remember: Remember:

Closed Claims

Open Claims

Incurred Claims



Part5

Expenses

39



Expenses

77

Loss adjustment expenses for: Defense by the coverage provider (whether a

first-party or third-party claim) for litigation involving a claim Cost containment

Defense and Cost Containment Expenses (DCCE)

Part5



DCCE Expenses

78

Examples: Surveillance Litigation management Fixed amounts for cost containment Fees or salaries for appraisers, private

investigators, hearing representatives, reinspectors, and fraud investigators—onlyif working in defense of a claim Attorney fees (to defend)

Part5

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

40



Part5DCCE Expenses

79

Report DCCE paid and case

For all states except Texas, required reporting for PY 1994 and subsequent

Texas required for PY 2006 and subsequent

Call 3Call 3

AccumulatedPaid(11)

CaseOutstanding

(12)



Calls 8, 31, and 10

41



Call 8—Reconciliation Report

81

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

Part9



Call 8—Reconciliation Report

82

Call 8 Line (1) comes directly from Calendar-Accident Year Call 5:

Call 5Call 5

Call 8Call 8

42



Call 8—Other Reconciliation Items

Excluded from NCCI Financial Call 5:

Federal (F)-Classifications

Maritime and Other FELA Classifications

Underground Coal Mine Classifications

National Defense Projects

Large Deductible Experience

83

Part9



Call 8—Reconciliation Items

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)

84

Part9

43



Call 8—Reasons for Difference

85

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 15–18

Note: Reasons for Difference explanation is not necessary if the difference is between:• +/– $5,000 for Premiums/Losses• +/– $50,000 DCCE

Part9



Call 8—Example

86

44



Call 31—Large Loss andCatastrophe 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

87

Part9




Includes ELE claims that are assigned unique catastrophe numbers:

Call 31 includes Catastrophe Numbers 14, 28, 48, 77, 87, and 93

Do not report ELE or large loss claims when part of a large deductible policy Exception: Florida

88

Part9

45




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

89

Part9



Call 31—Example

90

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—Open1—Closed2—Reopened

Part9

46



Call 10—Schedule Rating and Other Prospective Premium Adjustments Call

91

Call 10—Policy year accumulated earned schedule rating adjustment for the most current five years

Report adjustments at a company rate level

Part9



Review Name the three premium levels reported in the Financial

Calls. Also which one is used in the filing?

On what basis should losses be reported—gross or net?

What is the purpose of Call 8?

What amount of incurred losses constitutes a large loss?

Should closed claims for large losses be reported on Call 31 for subsequent valuations?

92

47



Resources and Tools



Data Reporting Resources Box

48



Financial Call Season Web Article



21 of 22 Calls submitted electronically through the Financial Data Collection Tool.

Create

Copy

Import

Validate

Submit

Check Notifications

How Is Financial Data Reported?

49



How Is Financial Data Reported?



The Financial Call Reporting Guidebook is your primary reference for instructions

on completing your Financial Calls accurately.

98

50



Financial Call Reporting Guidebook

99

Part 1—Guidebook Overview

Part 2—Reporting Schedule

Part 3—Recommended Workflow

Part 4—Reporting Requirements

Part 5—Call Components

Part 6—Additional Requirements for Experience

Part 7—DSR Level Premium

Part 8—Taxes and AssessmentsGuide

Part 9—Financial Call Instructions

Part 10—Editing and Other Validation Procedures

Part 11—Data Quality Compliance Procedures

Part 12—Electronic Import Record Instructions

Part 13—Glossary



Support for Financial Call Reporting:

Financial Call Reporting Guidebook Edit Matrix Data Quality Guidebook Financial Call Season Web Article Financial Data Collection Tool Financial Data Validator (Assigned) Webinars on Demand Data Educational Program

Materials

100

51



Part3

Recommended Workflow



Workflow Steps

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

102

Part3

52



Workflow Benefits

The recommended workflow assists you in reporting your data in two ways:

103

Part3

Accuracyand

Efficiency



Workflow Flowchart

104

Part3

53



Active Deviation Review

105

Essential for DSR level premium accuracy

Financial data validator must make entries for prior policy years

Review and Update

Deviation/ Loss Cost Multiplier Information



Active Deviation Example

106

Update Active Deviation

Loss Cost Multiplier = 1.690

54



Call Creation

107

Create Financial Calls and Self-Audit

Form

Part3



Call Creation Example

108

55



Call Validation

109

Validate Financial Call data

Part3



Call Validation

110

Edit Matrix—Sample Edit

Part3

56



Call Validation Example

111



Edit Review

112

Review Edit Log

Are there edits?

Correct Call data or provide

explanations

YES

NO

Part3

57



Edit Review

113

Edit Log within Financial Data Collection Financial Call Edit Matrix, Part 10 of the Financial

Call Reporting Guidebook



Edit Resolution/Explanation

To resolve Pre-submission Edits:

Correct the data

and/or

Provide acceptable explanations Confirm data is correct Include specific details and amounts Address all edit components

Revalidate

114

58



Call Submission

115

Submit FinancialCall data

Part3



Compliance Forms

116

Submit completedSelf-Audit Form via Financial

Data Collection

Fax Acknowledgment Form with original

submission

Part11

59



Part11

Self-Audit Form Part 1

117

Self-Audit Form is submitted within Financial Data Collection on an annual basis One form required per carrier group (countrywide)

• Confirmed Review• Does Not Apply• Qualified Review



Self-Audit Form Part 2

118

60



Acknowledgment Form

Last step is submitting the Acknowledgment Form

Hard copy only (primarily submitted via fax) and receipt date is keyed in by NCCI

Only a company officer, accredited actuary, or outside consultant can sign the form

Applicable for all ratemaking Calls that are due April 1

Submit before or on April 1, but after all ratemaking Calls due April 1

119



Acknowledgment FormExample

120

Part11

61



Season Overview

121

2016 Financial Call Season Circular (September 2015)

Updated Financial Call Reporting Guidebook (November 2015)

Financial Data Collection updated with new Valuation Date (December 2015)

Enter in New Active Deviations (January–March 2016)

Create and Submit Financial Calls (January–March 2016)



Review—Workflow Flowchart

122

Yes

No

Or

62



Review

If you have an LCM of 1.690, how would you enter it in the Active Deviation screen in the Financial Data Collection tool? _______

True or False: It is best to create/validate your Calls on a Call-by-Call basis.

How do you know if you have edits?

True or False: “Correct as Reported” is a sufficientexplanation for an edit.

123



Supplemental Information

Presenter Biographies

Brian Barnett has worked at NCCI for 15 years. He is currently a senior data analyst for the Financial Data Team in the Data Resources Division. His primary duties include serving as a lead in the Quality Program and performing data validation for complex carriers.

Brian has a bachelor of science degree in geographic information systems from Florida Atlantic University.

Ashley Jomant joined the Financial Data Team at NCCI in mid-2014. Prior to joining NCCI, she worked on an actuarial team reporting Financial Calls for a workers compensation insurance carrier and had also held a variety of roles in Professional Employee Organizations and treaty underwriting.

She is currently a senior data analyst for the Financial Data Team within the Data Quality and Compliance Services Department. Her primary responsibilities include serving as the assigned risk liaison, reviewing carrier deviations, validating aggregated financial data, and providing customer support.

Ashley holds a bachelor’s degree in mathematics, with a minor in statistics, and a certificate in actuarial science from Florida Atlantic University.

.

Documents

Basics of Financial Call Data Reporting€¦ · Palm Beach County Convention Center ... Basics of Financial Call Data Reporting Presented by: ... NCCI State-Approved Loss Costs