Texas Officially Joins The NCCI System
Earlier in the year, The Texas Department of Insurance signed order 3455 adopting NCCI’s Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan), including Texas exceptions. This manual becomes effective for units with policy effective dates January 1, 2015 and subsequent, and is optional for prior policy effective dates.
The state of Texas will also have many exceptions to the NCCI manual. The state may, over time, decide to remove more of the exceptions.
Adopting the manual does not mean Texas cannot reject any part of the NCCI manual. They do not have to necessarily accept the rates promulgated by NCCI. The next few years should be interesting as Texas was very independent in its WC operations.
One area to note is that polices prior to January 1, 2015 may also be affected by the adoption of the NCCI rules.
One has to wonder if NCCI will push Texas to not keep the opt-out system which is in place presently in Texas.
See tomorrow’s article on one major step that Texas has taken in the area of construction. Texas has at least started the conversation on not allowing construction firms to opt-out of WC coverage.
Most of the companies that we have consulted with that decided to opt out of WC coverage for their employees have ended in disastrous results once they have a series of claims or a few severe accidents.
West Virginia was very successful in adopting the NCCI manuals and ratemaking process. There have been many reductions in the rates charged to policyholders since the switch to NCCI.
Texas policyholders should see rate reductions in the future. However, the opt-out system may be shown to be a violation of the Law of Large Numbers. This may affect any type of rate reductions.
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