Colorado Workers' Compensation Insurance Market
INTERIM COMMITTEE TO STUDY ISSUES RELATED TO PINNACOL ASSURANCE
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09:05 AM -- Call to Order
Senator Carroll called the committee to order.
09:05 AM -- Colorado Workers' Compensation Insurance Market
Mike Taylor, NCCI, gave a presentation on trends in Colorado's workers compensation system using a power point presentation entitled Overview of the Colorado Workers Compensation System(Attachment A).
Mr. Taylor discussed the filing of rates using another power point presentation entitled Ratemaking Process(Attachment B).
Mr. Taylor responded to questions about the types of industries and their relation to the age of workers. Representative Gerou asked Mr. Taylor how Pinnacol compares nationally. There was a discussion about the recent reduction in rates in Colorado and the reasons why. Mr. Simon asked whether rates are based on paid amounts or reserves and what typically happens to the extra money that is brought in. Mr. Taylor explained that reserves are there to cover future payment of claims and expenses. Mr. Simon asked why Colorado tends to have more attorney involvement than other states. Mr. Taylor said that he does not know why and explained that there are many potential factors that could go into that.
Mr. Johnson asked about the trends in medical severity and whether it is expected to go up. He added that company surplus levels are based on projected medical severity and asked whether companies should look at increasing their surplus levels in response. Mr. Taylor said that should be looked at by insurance companies. Senator Harvey asked about Colorado's decline in frequency of claims and how it correlates to rates. Mr. Taylor said that rates are driven both by the number of claims and the type of injury. Mr. Taylor discussed the decline in frequency and stated that a recession can impact the frequency. He noted that businesses looking a layoffs tend to keep older, more experienced employers and tend to let younger, less experienced workers go, which may contribute to a reduction in injuries.
There was a discussion about the recent drop in rates. Senator Mitchell talked about the surplus held by Pinnacol in relation to the recent drop in rates. Representative Pace talked about the reduced rates in relation to the reduction in the frequency of injuries. Representative Pace asked whether the reduction could be impacted by a reduction in the acceptance of claims. Mr. Taylor agreed that could be a part of it.
Senator Carroll talked about the reduction in the amount of benefits paid. Senator Carroll asked about the incurred but not reported (IBNR) costs. Mr. Taylor explained that all states have incurred but not reported costs.