Rates

Missouri is a "use and file" state for workers compensation rates. Rates must be filed within 30 days of their effective date.

Our statutes require each company to file final rates, not just a loss cost multiplier (LCM). Each company must indicate which set of loss costs it is using and how it arrived at its LCM. The company can identify the loss costs used in its cover letter, and its LCM on the Rate Development Summary Form.

Loss Costs

The NCCI publishes four different sets of loss costs each year: NCCI loss costs with and without trends and MDI loss costs with and without trend. A company can also incorporate its own data into the loss costs to modify all of them or just certain classes.

Loss Cost Multipliers

The LCM should be calculated using the formula 1/(1-selected expenses). For example, if a company's selected expenses are 20%, the LCM will be1/(1-.20) = 1/.80 = 1.25. If a company's LCM does not follow this formula, its formula should be shown in detail on the bottom of the Rate Development Summary Form or in a separate exhibit.

The use of loss cost modifications should be clearly indicated in the cover letter and in the LCM calculation. If a -10% modification is used, the LCM formula in the previous example becomes .90/(1-.20) = .90/.80 = 1.125. The company should give some justification for using loss cost modifications (and "Gee, mom, all the other companies are using them!" isn't a good reason).

Rate Change

A company's rate change should be identified in the cover letter and in Exhibit A and Exhibit B (the Independent Rate Filing Form and Rate Development Summary Form). It should be calculated based on the change in the company loss costs and LCM. The company's mix of business should not be considered in this calculation. The rate change impact on the current book of business should be identified in the premium level change on Exhibit A.

Diskettes

MDI requires each company to file information on its rates on a diskette in a specific format. This information is used to provide consumers with cost comparison information. It is permissible for a company to list only the classes it actively markets on the diskette. However, the rate pages in the filing should contain all the classes the company anticipates writing.

Other Exhibits

If a company is using a standard, unmodified set of loss costs, all it needs to submit in its filing is:

1. A TD-2 form
2. A cover letter
3. Exhibits A and B
4. Rate pages and miscellaneous rating values
5. The rate diskette

If the loss costs are being modified or the LCM is being changed, additional exhibits should be attached to the filing.

Tips

When a group makes a filing, each company is reviewed individually. The group should provide a complete copy of the filing for each company. The return copy can be a condensed, combined version that covers all the companies.

A group can combine all its companies on one diskette. The group should just append each company's rate and company information to the CLASS.TXT and CMPYINFO.TXT files.