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WC overall rate level decreases 5.8% in 2020

The New Jersey Compensation Rating and Inspection Bureau received approval from the Department of Banking and Insurance for a rate revision of -5.8% to become effective Wednesday, Jan. 1, 2020, applicable to new and renewal policies. The NJCRIB distributed Circular Letter No. 1974 detailing this rate revision, along with other changes presented in Manual Amendment Bulletin No.493, Manual Amendment Bulletin No. 494 and Statistical Circular No. 126. NJCRIB had filed for a decrease of 3.8% in rates and rating values, but the DOBI mandated a further reduction of 2%.

Rate level. The cumulative effect of all filed rating element changes results in a final collectible premium level reduction of 5.8% from the 2019 level. However, most individual classification rates will change based on the latest data reported in accordance with the Statistical Plan. The classification rates are published in Circular Letter No. 1974.

The elements included in the cumulative overall rate level are upward adjustments of 0.9% for benefit changes and 2.5% for the loss adjustment expense, general expense, production expense, security fund, and the rating bureau expense. Countering these adjustments is a downward adjustment of 4.2% for loss experience and 5.5% for trend factor.

There is no change in the $0.03 per unit of exposure Foreign Terrorism Risk Premium Charge and the $0.01 per unit of exposure Domestic Terrorism, Earthquakes and Catastrophic Industrial Accidents Premium Charge.

Classification relativities. The year 2020 begins with a total of 551 classifications, including maritime and federal employments. Seven of these do not carry a rate assignment and another four of the rated classifications are left unchanged. Of those classifications remaining, 156 undergo increases and 384 undergo decreases. There is no change in rates for private estate or residence employees. However, all four full-time domestic servant classifications—0910, 0912, 0913 and 0915—have been consolidated into the single 0913 classification, including in-servants, out-servants and private estates.

Policy surcharges. There is a downward adjustment of the Second Injury Fund surcharge from 5.48% to 5.34% and the Uninsured Employers Fund surcharge remains at 0.0%.

Expense constant. The expense constant remains at $160 for all classifications, including residence employees.

Minimum premium. The minimum premium multiplier increases from 180 to 200, but the maximum minimum premium remains at $950.

Maximum/minimum payroll. The maximum weekly payroll to be used for active executive officers, individual proprietors, partners and LLC members changes from $2,590 to $2,640, and the minimum weekly payroll changes from $650 to $660. Also, the minimum yearly payroll for a member of a board of education changes from $6,760 to $6,860 and the minimum for other appointed or elected officers changes from $1,350 to $1,370.

Benefits. The maximum weekly disability benefit is increased from $921 to $945 and the minimum benefit is increased from $246 to $252. In the case of permanent partial disabilities, the range of maximum benefit will be from $252 to $945, with no change in the minimum weekly benefit of $35.

PPAP factor. The Plan Premium Adjustment Program minimum factor is applied to standard premium in order to reflect the risks inherent in the residual market. This factor remains at 20%.

Schedule Rating Plan. The schedule rating credit and debit maximum remains at 25%.

Classifications. Payroll amounts have been revised in the footnotes of pertinent class codes. Nine low credibility classifications, which no longer have adequate experience to justify independent rate development, have been merged into other classifications.

Other changes. Included with the NJCRIB filing are changes to experience-rating factors/tables and retrospective rating values.