Newark, NJ – The Commissioner of Banking and Insurance has approved a 3.6% increase in rates and rating values applicable to New Jersey workers compensation and employers liability insurance effective January 1, 2014 on a new and renewal basis. The rating components of the increase are summarized below.
PREMIUM AND LOSS EXPERIENCE
Analysis of data for the latest two complete policy years and the latest calendar-accident year, following adjustment to present premium and benefit levels, using paid and incurred losses separately, indicates a premium level adjustment factor of 0.979 (-2.1%) due to experience.
A trend factor of 1.055 (+5.5%) is included to recognize changing exposures and losses.
Effective January 1, 2014, the maximum weekly benefit with respect to all types of injuries, except permanent partial disabilities, will be changed from $826 to $843. The minimum weekly benefit will be changed from $220 to $225. In cases involving permanent partial disabilities, the present maximum weekly benefits ranging from $220 to $826, varying on the basis of duration of disability, will be changed to $225 and $843, respectively. The minimum weekly benefit for permanent partial injuries will remain at $35. The effect of the changes to the minimum and maximum weekly benefits results in a premium level adjustment factor of 1.007 (+0.7%) due to benefits.
There is need for decreases in the provisions for Loss Adjustment Expense, the Security Fund and Bureau Expense. The changes to the expense provisions result in a premium level adjustment factor of 0.996 (-0.4%).
OVERALL PREMIUM/RATE LEVEL CHANGE
The combined effect of the above adjustment factors results in an indicated premium level adjustment factor of 1.036 (+3.6%). The rate level adjustment is also an increase of +3.6%.
A Terrorism Premium Charge of $0.03 per unit of exposure applies to all policies except for the exclusions in 3:9-2 and 3:9-5 of the Manual. Upward deviation from the $0.03 rate is permissible.
A Catastrophe (Other than Certified Acts of Terrorism) Premium Charge of $0.01 per unit of exposure applies to all policies except for the exclusions in 3:9-9 and 3:9-12 of the Manual.
The adjustment of classification rate relativity is based on the policy experience for 2006 through 2010, as reported through the Statistical Plan. The changes in the rates for the individual classifications including those in the Admiralty and Federal Employers Liability Act coverage are supported by, and derived from, the experience.
There are 572 classifications in the Manual effective January 1, 2014 including the codes to accommodate Federal employments. Eight classifications carry no rate assignment. Of the remainder, 381 will experience increased rates, the rates for 167 classes will decrease, and 16 are unchanged. There are no changes to the annual policy charges for private estate or residence employees as set forth in 3:5-12 of the Manual.
In order to comply with the decision of the Commissioner, changes in manual rates for any classification have been limited to an increase of 15% from last year’s rate. The increase percentage applicable to non “F” classifications when coverage is provided under the United States Longshore and Harbor Workers Compensation Act remains unchanged at 50%.
MINIMUM PREMIUM FORMULA
The minimum premium multiplier is increased from 100 to 150 and the maximum minimum premium is increased from $850 to $900. The change to premium resulting from the new rating values in the minimum premium formula is minimal and does not impact the overall rate level. Special minimum premiums applicable to private residence classifications and to classifications subject to Maritime or Federal Employers Liability Act coverage are not affected.
New Jersey law mandates application of separate policyholder surcharges to finance the Second Injury and Uninsured Employers’ Funds. Based on the Department of Labor and Workforce Development’s estimate of 2014 Fund requirements, the policyholder surcharge percentages effective January 1, 2014, on a new and renewal basis to be applied to the modified premium are:
- Second Injury Fund 6.56%
- Uninsured Employers’ Fund 0.00%
RATES AND VALUES
The complete Table of Rates and Other Values, 2:1-1, 2:1-2, 2:1-3 through 2:1-7, 3:5-12 and 3:6-8, applicable to new and renewal business effective January 1, 2014 are avaialble here (PDF).