Pinnacol’s Announces 2017 Rate Decrease and Intent to Issue a General Dividend

Rates
• On Nov. 2, 2016, Pinnacol Assurance’s board of directors approved a 3.2 percent average rate decrease across our book of business.
• This decrease, which is effective Jan. 1, 2017, compares against the Colorado Division of Insurance’s recent approval of a 2.4 percent decrease in loss costs for the 2017 policy year. Loss costs reflect the portion of premiums covering expected medical and lost wage benefits/payments and expenses associated with managing claims. Each insurance company offering workers’ compensation coverage in Colorado must file loss cost multipliers (LCMs) that adjust loss costs to incorporate factors that are unique to its specific book of business when setting rates and its own expense, profit and contingency factors.
• Pinnacol’s 2017 rate decrease is related to:
o Steady improvement of our combined ratio
o Continued decrease in lost time claims frequency
o A strong Colorado economy
• Rate adequacy is crucial to Pinnacol’s financial strength, ability to compete and Colorado’s workers’ compensation marketplace stability.
General Dividend
• In addition to approving a rate decrease for 2017, Pinnacol’s board of directors announced its intent to issue a general dividend to policyholders in 2017.
• Unless there is unexpected material deterioration of Pinnacol’s financial results in the fourth quarter of 2016, the general dividend paid to policyholders would be approximately $50 million. The final amount of the general dividend will be set in February 2017 and will be issued no later than April. The 2017 general dividend represents a significant increase from our 2016 general dividend amount of $30 million.
January 2017 New and Renewal Quoting Timeframes
Please note the following timeframes for Jan. 1, 2017 pricing:
• Jan. 1, 2017 renewals will invoice on Dec. 7, 2016.
• Jan. 1, 2017 new business quoting capability will be available to agents on Monday, Nov 14, 2016.
2017 Loss Cost Multipliers (LCMs)
In 2017, the loss cost multipliers will be as follows:




Please Note: Heritage, Century and Classic LCMs are increasing compared to 2016, but Pinnacol still expects an overall average rate decrease for policies within these LCMs in line with our total book of business average of -3.2%.

Pinnacol Performance Credit Change
Pinnacol’s Performance Credit (PPC) is designed to recognize policyholder loyalty and pro-active risk and claims management performance. Upon renewal on or after Jan. 1, 2017, policyholders in our Legacy LCM will be eligible for the PPC, subject to meeting the following criteria:
• Annual manual premium between $1,250 and $10,000.
• Minimum experience of one year and nine months of continuous coverage with Pinnacol.
• Sustain no temporary total disability (TTD) claims open longer than 60 days throughout the evaluation period.
Mid-Size Deductibles Change
Effective Jan. 1, 2017, Pinnacol will customize all deductible quotes larger than the State’s filed small deductible program (greater than $16,500 in 2017) to each individual risk. Pinnacol’s decision to discontinue our filed mid-size deductible plan was in response to the annual split point and small deductible program increases. Pinnacol will continue to offer a full range of deductible and loss sensitive program options.

2017 Split Point Change
The split point refers to a loss threshold used for the calculation of experience modifiers (e-mods). The split point will be changing from 16,000 in 2016 to 16,500 in 2017.

Small Deductibles
The following small deductible credits apply to all new and renewal business written in 2017:




Note: The change in the Small Deductibles table is a reflection of the Division of Insurance’s change to the split point value.

Payroll Premium Basis
Firefighters HB-1008 payroll for volunteer firefighters (VF): $1,132 per firefighter
Minimum/maximum payroll for partners, sole proprietors, executive officers and members of Limited Liability Companies (LLCs): $53,700

Note: Pinnacol’s 2017 payroll premium basis is in alignment with NCCI’s payroll premium basis.

Expense Constant
Annual Policy (expense constant) fee: $195

2017 State Accident Limitations
State per Claim Accident Limitation*: $232,000
State Multiple Claim Accident Limitation: $464,000

*This is the maximum individual claim loss amount that can be included in an employer’s losses for experience rating purposes.
Note: Pinnacol’s 2017 state accident limitations are in alignment with NCCI’s state accident limitations.

Increased Limits for Employers’ Liability
There are no changes in increased limits for employers’ liability in 2017. (Please refer to the Table of Charges for Increased Limits in Pinnacol’s Agency Manual for more information.)
Note: Increased limits are not an automatic addition to any policies, and must be specially requested.

2017 Premium Discount Table
There are no changes to Table 9 for 2017. (Please refer to the 2017 Premium Discount Table in Pinnacol’s Agency Manual for more information.)

Premium Basis “Taxi Cab”
Applicable in accordance with Basic Manual footnote instructions for Code 7370 – “Taxicab Co.”
Employee operated vehicle: $80,600
Leased or rented vehicle: $53,700

*Terrorism Risk Insurance Program Reauthorization Act (TRIPRA)
*There wasn’t a change to TRIPRA in 2017. This description is included as a reminder about how the program works.

A summary of changes to TRIA are as follows:
• The Act was extended for six years and will expire Dec. 31, 2020
• An act of terrorism must be certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security, and the Attorney General of the United States.
Effective Jan. 1, 2016:
• The current 85% Federal share of compensation under the Terrorism Insurance Program Decreases by one percentage point per calendar year until it is equal to 80%
• The current program trigger for aggregate industry insured losses to exceed $100 million increases by $20 million per calendar year until it is equal to $200 million
• The current $27.5 billion insurance marketplace aggregate retention amount increases by $2 billion per calendar year, beginning in 2015, until it is equal to $37.5 billion, and is subject to further revision thereafter.