Catastrophes and Workers Compensation Ratemaking

For the first time in many years, NCCI has modified the methodology used to determine a state’s overall average loss cost or rate level indication for workers compensation. The aggregate ratemaking methodology was modified specifically to handle two general categories of large events for which workers compensation exposure exists. They are: a) large individual claims, and b) catastrophic events related to the perils of industrial accidents, earthquake,and terrorism. NCCI actuaries worked with a well-known modeling firm to determine provisions for catastrophic events on a state basis. "Catastrophes and Workers Compensation Ratemaking" describes the new methodology NCCI has developed, implemented, and filed in many of its states, and, for the first time in CAS literature, it documents how computer modeling was applied in workers compensation to determine a loss cost by state.