CAS Ratemaking Seminar Tampa FL March 8 2002

CAS Ratemaking Seminar Tampa, FL March 8, 2002 Workers’ Compensation Ratemaking Issues Massachusetts Presented by: Don Bashline Workers’ Compensation Rating and Inspection Bureau of Massachusetts

Massachusetts WC Ratemaking Issues n Rate Regulation n Current Market Climate n Things we’re worried about n Role of the Bureau

Rate Regulation n n Rates subject to prior approval after hearing Insurers may file downward deviations or credit-only schedule rating plans Approved rates must remain in effect at least one year Bureau must file at least every 2 years - carriers may file own rates

Current Market Climate - Legacy of Reform n n n Cost containment efforts and 1991 reform legislation helped cut rates and costs in half Residual market share cut from 65% to 10% Competitive market - all major writers have filed discounts of up to 30%

Current Market Climate - A Fragile Equilibrium n n n Costs and rates are stabilizing Residual market operating at near breakeven Legislature has been quiet

Current Market Climate - Catalysts for change? n n State’s largest carrier closed for business in 2001 The Big Dig winds down 2002 Election likely to bring changes Pool Growth continues - how big is too big?

Things We’re Worried About n n n Trend - Catching the turning point when it comes Catastrophe Loads and Terrorism Legislative overhaul - coming sooner or later

More Things We’re Worried About n n n Medical Fee Schedule - how low can it go? An eventful economy recession now, what next? Data - To do more, we need more

Role of the Rating Bureau n n n Statutory role - Statistical agent, pool administrator, rates and rating plans Information - For members, policymakers, employers and other system stakeholders www. wcribma. org - check it out!

Thanks for your attention Questions and discussion please!