Missouri Injury Management Program
The Missouri Injury Management Program is essentially an “earn while you learn” program providing many significant benefits to participating employers. A premium credit is offered to employers who become certified in MIMP. While the credit is a meaningful incentive, the true value of the program lies in the long-term savings that can be achieved through loss management at the work site. The key to controlling workers’ compensation costs is providing employers the education, tools, and procedures needed to prevent injuries and manage injured workers. Through MIMP, employers are taught the true cost drivers of the system and are given tools and procedures to manage those costs. Employers who enroll and become certified in the Program are eligible for three annual policy credits of 5% each year.
To receive the premium credit, employers must fulfill all the certification requirements for the entire policy year.
The Missouri Workers’ Compensation Plan requires that MIMP notify any prospective client of the following:
- This program is available to experience rated employers in the Missouri Workers’ Compensation Plan with manual premiums above $3,500 and non-experience rated employers with manual premiums above $5,000.
- Note: Employers with a total premium above $250,000 must participate in the mandatory LSRP but may also participate in MIMP. MIMP employers under LSRP are not eligible for the premium credit but will be given a lower minimum factor for valuations.
- The premium credits available under this program cannot be offered after the subscriber has received credits based on three years of participation.
- To be eligible for the full premium credit, the subscriber must enroll in the program within 90 days of policy inception or within 30 days of a qualifying endorsement.
- Premium adjustments resulting from the application of any policy credit will be made at the time of final audit.
- Approval of the MIMP credit is based on information and other data available to the Missouri Workers’ Compensation Plan at the time of approval and does not constitute a warranty of the quality or effectiveness of services offered by the Missouri Injury Management Program.
Assigned Risk Adjustment Program (ARAP)
- Eligibility: A risk shall be eligible for the Assigned Risk Adjustment Program if it is eligible for an experience rating modification. The application of this program is mandatory for all eligible insureds and shall apply to all assigned risk policies written for such insureds.
- ARAP Surcharge Formula
After the calculation of the experience modification factor (M) for a particular risk, the weighted test ratio (R) is calculated.
R = ((0.5 - 0.5W)Ap / M*EP ) + ((0.5 - 0.5W)A / M*E)
where:
W is the weighting value
A is the actual losses, as limited on a per accident basis
Ap is the actual primary losses
E is the total expected losses
Ep is the expected primary losses
M is the experience modification
All values are those used in the experience modification calculation.If R is greater than 1.0, a surcharge factor S is calculated using the following formula:
S = 1 + ((0.08)Ê(R – 1)(1.25) / (Ê + 3)(0.5))
where:
Ê is the total expected losses of the particular insured shown in thousands. Ê shall not exceed 40.
R is the weighted test ratio calculated in 2.a. R shall not exceed 2.0.- The surcharge factor S will appear on all rating forms. This surcharge factor will be applied to the standard premium developed in the state(s) where effective.
The surcharge is limited to a maximum of 25% of standard premium. Only insureds with expected losses equal or greater than $25,000 will be subject to the maximum surcharge. The following table shows sample maximum surcharges by risk expected loss size.
Risk Expected Losses Maximum Surcharge $2,500 9% 5,000 14% 10,000 22% 25,000 and over 25% - ARAP Definitions
For the purposes of this program, the following definitions apply:- Weighted Test Ratio—A comparison of the risk's actual losses to the modified expected losses. A ratio greater than 1.00 is subject to the ARAP surcharge. This test ratio is limited to 2.00.
- ARAP Surcharge Factor—The factor is applied to the normal standard premium when the insured is an assigned risk. This factor is determined by a formula using the weighted test ratio.
- Experience rated risks with multistate operations shall be subject to the Assigned Risk Adjustment Program in states that have approved it. For risks with interstate exposure, the R (test ratio) and the S (surcharge) values will be computed on a full interstate basis. In ARAP states, S will be used to develop the surcharged premium in those states only.
Missouri Loss Sensitive Rating Plan
The rules under this pan are mandatory and apply to only to workers' comp and employers liability insurance that is written under the Missouri Workers' Compensation Plan. The LSRP shall apply to all assigned risk employers qualifying for the plan.
General Explanations
Plan Is Mandatory
The Residual Market LSRP is a mandatory plan and shall apply to all assigned risk policies with a total estimated annual standard premium or total audited standard premium that equals or exceeds $250,000.
Object of Plan
This plan adjusts the premium for the insurance to which it applies on the basis of losses incurred during the period covered by that insurance. The intent is to charge a premium that reflects those losses. This plan uses the losses incurred during the policy term to establish the cost of insurance and includes provisions for all expenses and taxes on premium. The policy period is one year.
Loss Control Incentive in Use of the Plan
The LSRP provides an incentive to the employer to control and reduce losses because the LSRP premium will be the result of losses during the policy period. To the extent the employer controls losses, there is a reward through lower premiums. To the extent the insured does not control losses, there is a penalty through higher premiums.
Experience Rating Plan Manual
Separate policies in the MWCP under common majority ownership as provided by the rules of the Experience Rating Plan that are assigned to the same carrier shall be combined for computation of the LSRP premium.
Risks Operating in More Than One State
LSRP will be applied on an intrastate Missouri-only basis.
LSRP Expenses
The expenses are fixed and are included in the basic premium.
| LSRP Factors | |
|---|---|
| Basic premium factor | 0.300 |
| Loss conversion factor | 1.125 |
| Tax multiplier | 1.028 |
| Retro development factors | First adjustment: 0.17 |
| Second adjustment: 0.03 | |
| Third adjustment: 0.00 | |
| Minimum factor (Min) | 0.75 [uncertified MIMP employers] |
| 0.65 [certified MIMP employers] | |
| Retro Rating Plan | Maximum factor (Max): 1.75 |
LSRP Calculation Example
Note: Illustrative values (Not MIMP certified)
| Calculation Example | ||
|---|---|---|
| Standard premium (SP) | $339,000 | |
| Incurred losses 1st valuation | $254,250 | |
| Incurred losses 2nd valuation | $271,200 | |
| Incurred losses 3rd valuation | $305,100 | |
| Factors | Basic | 0.30 |
| Minimum | 0.75 or 254,250 = 0.75 x 339,000 | |
| Maximum | 1.75 or 593,250 = 1.75 x 339,000 | |
| Loss Conversion factor (LCF) | 1.125 | |
| Tax Multiplier | 1.028 | |
| Retrospective development factor (RDFs) | 1st adjustment | 0.17 |
| 2nd adjustment | 0.03 | |
| 3rd adjustment | 0.00 | |
Formula
LSRP premium (LSRP) = Tax [(Basic x SP) + (RDF x LCF x SP) + (LCF x incurred losses)]
LSRP premium calculations:
- 1st adjustment
- LSRP = 1.028 [(.30 x 339,000) + (.17 x 1.125 x 339,000) + (1.125 x 254,250)]
- LSRP = 1.028 [101,700 + 64,834 + 286,031]
- LSRP = 1.028 [452,565]
- LSRP = 465,237
- Additional premium (AP) = $58,437 [465,237 – 339,000 – 67,800]
- 2nd adjustment
- LSRP = 1.028 [(.30 x 339,000) + (.03 x 1.125 x 339,000) + (1.125 x 271,200)]
- LSRP = 1.028 [101,700 + 11,441 + 305,100]
- LSRP = 1.028 [418,241]
- LSRP = 429,952
- Return Premium (RP) = $35,285 [465,237 – 429,952]
- 3rd adjustment
- LSRP = 1.028 [(.30 x 339,000) + (.00 x 1.125 x 339,000) + (1.125 x 305,100)]
- LSRP = 1.028 [101,700 + 0 + 343,238]
- LSRP = 1.028 [444,938]
- LSRP = 457,396
- AP = $27,444[457,396 – 429,952]
Impact on Your Workers' Compensation Costs
The ultimate impact of the LSRP will depend on your losses over time. However, with good loss experience an individual employer’s final premium is typically less than standard; it is more than standard with poor loss experience.