Class Ratemaking for Workers Compensation: New Developments in Loss Development

For loss cost filings beginning in October 2009, NCCI implemented the largest set of changes in 40 years to the methodology used to determine class pure premiums in workers compensation.

This paper describes the new loss development methodology NCCI has implemented, the applied research approach, and some analyses of actual results achieved after making the modifications. It illustrates how specific areas of class ratemaking were modified, namely, loss development, limiting large claims, and applying expected excess provisions.