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Old 02-02-2018, 05:22 PM
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Default WC Premium Discount

Any (perhaps exam 8) material on calculating/manipulating premium discount factors for WC policies anyone can recommend? It may be a simple enough concept that there's no specific literature on it, but just checking. My WC experience is limited.
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Old 02-03-2018, 10:38 PM
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The premium discount used by NCCI is most states is public information on the Indiana Rating Bureau website, look at page 9

http://www.icrb.net/rate_pages/1_1_2018rates.pdf

Basically, there are three tiers of discounts as the premium increases. I haven't looked lately, but I believe type A and type B refer to the type of company.
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Old 02-05-2018, 09:25 AM
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Those are the numbers I was looking for. But to be more specific, NC still has a rate bureau and the premium discount factors are not filed (see here if interested). I was hoping for any info on techniques in calculating those percentages if someone on here happened to know. Some companies are using those 'other state' filing numbers but others look like they're doing their own. Again, WC is not really my thing (not sure why I was asked about this...) so it's entirely possible this is a stupid question.
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Old 02-05-2018, 03:14 PM
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Default Premium discounts

Hi,

Although premium discount in WC may have more than one meaning, I think of it as a discount to larger premium sizes whose expense to premium ratios are lower than the expense ratio in the manual rate.

The main reason expense to premium ratios vary by size of premium is that agent's commission also varies by size of premium. You should be able to find your company's commission schedule, and this will help you determine what premium discount is appropriate.

Expense ratios also vary in the general underwriting expense component - it does not require twice the dollar amount of underwriting expenses to put a policy on the books that has twice the premium. However, this has a smaller effect than the commission, and this requires some special study (a time and motion study?) to measure.
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Old 02-05-2018, 03:48 PM
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Thank you. That explanation is helpful, and probably should have been more apparent.
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