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Hawaii Heavy Rate Increase – It’s The Medical Severity Stupid

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Hawaii Heavy Rate Increase Likely Due To Medical Severity + 1

A few weeks ago, I wrote an article on the 27+% rate disparity between the NCCI rated states.  I promised to review why the reason for the 2020 Hawaii heavy rate increase when most states were lowering their advisory rates.

The stupid was me for not looking at the supplemental 2020 info provided by NCCI when I published the original article. The answer was right in front of me.

These two NCCI PDF files provided the information needed to find the answer.   Check them out for reference.

Wait, hold on, I think the reason was beyond just the medical part of the workers’ compensation claim severity.   Let us look at two charts from the above links.

By the way, NCCI has a map of what states are covered in the State Advisory Forums.   If you operate in any of the states that NCCI covers, you might consider looking at the last State Advisory Forums for those states.   NCCI has a Submit Questions link on the page if you have any questions on the forums.

The Hawaii Heavy Rate Increase Reason in Two Charts

2020 Medical Severity

The chart below shows the spike in medical severity for Hawaii over the last 10+ years.  The chart is from page 9 in from the above first Hawaii NCCI link.

NCCI chart showing reason for Hawaii Heavy rate increase

Policy years 2016 and 2018 both show a spike in medical claim severity even though the 2017 policy year indicated a decrease.

NCCI does not often produce a supplement to their State Advisory Forums.  In the case of the 2020 Hawaii information, it produced another group of slides that you will find in the above second NCCI link.

2020 Number of Claims By Type

NCCI Chart for number of claims by type Hawaii heavy rate increase
(c) NCCI

Looking at the above chart, 46% of claims involved indemnity benefits or reserves.   Even if benefits were not paid, the files were reserved by the claims adjusters with indemnity benefits included on the claims.

Comparatively, the regional states and the US indemnity-based claims were 23% and 24%. Hawaii has double the number of indemnity claims than other states.  One could see a Hawaii heavy rate increase coming soon.

With Loss Cost Multipliers, the carriers operating in the Aloha state may reduce some of the rate spikes.  We shall see in 2022 and 2023 if the Hawaii heavy rate increases are lessened by the state.

 

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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