VENTURA, Calif.–(BUSINESS WIRE)–The world of Workers’ Compensation can be daunting for both agents and employers. Workers’ Compensation is a very dynamic, ever changing, and fast paced industry. “As a marketer, I continuously research potential [market] shockwaves with the goal of positioning our value proposition to intersect with new buying behaviors,” says Michael Dochterman, President of Precision Manufacturing Insurance Services. The Rate Index & Rate Index Market Indicator are cutting edge tools our industry professionals need. “Will Scott’s Workers’ Compensation Classification Rate Index is the first and only analytic tool that allows me to predict market trends with some level of certainty,” continues Mr. Dochterman.
The Rate Index
The Workers’ Compensation Classification Rate Index for experience rated employers helps identify increases in rates by combining the impact of Carrier Rate Filings, Expected Loss Rates (ELR) and D-Ratios. The ELR and the D-Ratio cause an experience modification to increase or decrease irrespective of losses. The Rate Index is then sorted in ascending order and assigned a Volatility Ranking. The higher the Volatility Ranking the higher the rate increase. This Classification Rate Index is a marketing tool for agents to solicit employers who have a high Rate Index and a high Pure Premium Rate (PPR).
“An agent would typically want to solicit employers whose rates are increasing to obtain the lowest possible quote and sell their services to lower and control the employers costs,” says Will Scott, President of IntelliComp (www.exmod.com). “Agents may also want to market to businesses whose rates will be going down, because agents can offer lower rates and develop a business relationship with new clients,” he adds. In his press release in September of 2010, Will Scott predicted that Speaker Mfg, Class Code 3683 would see a significant rate increase. After the Commissioner approved the rates and comparing Carrier Rate Filings, ELR and D-Ratios, Class Code 3683 has the highest Volatility Ranking of 498 and a possible rate increase of 32.90%. The complexities of the market require savvy business tools. “For a small brokerage such as ours, access to such a tool without spending tens of thousands of dollars on market research is of immense value,” adds Michael Dochterman.
Will Scott, President of IntelliComp, developed the Workers’ Compensation Classification Rate Index and Rate Index Market Indicator. The Rate Index Market Indicator illustrates hard and soft markets by graphing rate increases and decreases. When the “Number of Class Codes Increasing” line and “Number of Class Codes Decreasing” line cross, the market is changing. It is either changing from a hard market to a soft market, or from a soft market to a hard market. The Number of Class Codes Increasing/Decreasing lines crossed in January 2000, July 2004, and again in January 2009. “We are currently in a hard market for employers, because more class codes have increased than decreased,” states Will Scott. There are carriers that will have lower filed rates, but the Rate Index and Rate Index Market Indicator is an invaluable tool for agents to identify which class codes will experience an overall increase or decrease.
The Rate Index and Rate Index Market Indicator assists agents in servicing their clients and marketing their products and services in the complex Workers’ Compensation marketplace. “For example, the Rate Index Market Indicator predicts that the current hard market is slowly moving towards a soft market because more rates are beginning to decrease,” observed Will Scott. Will Scott, an expert in the Workers’ Compensation industry has developed the Rate Index and Rate Index Market Indicator as another tool to service our industry. It is now being offered free of charge.
Related Business News
The pure premium rates were approved for January 2011, by the Insurance Commissioner. It was stated to be a zero change in rates. Articles written about this change miss the point that it is a net zero change. This means some PPR’s, ELR’s and D-Ratios went up and some went down. Agents and employers need to look at each of their clients class codes, to see how they will be affected when their policy renews.
Many employers get a double hit. The double hit is when for a variety of reasons the approved PPR increases and the ELR and D-Ratio decreases. It is important to remember, that ELR and D-Ratios are inversely proportional to the experience modification. As ELR’s and D-Ratios increase, this decreases the experience modification. As ELR’s and D-Ratios decrease, this increases the experience modification. If the employer experience modification is going to increase, that higher experience modification will apply to a higher rate.
Will Scott, 805-920-5105