Starting in 2023, the Minnesota Workers’ Compensation Insurers Association will be including trend, tail development, and loss adjustment expense data in pure premium base rates.

This change will bring Minnesota more in line with the practices of states that use the NCCI for rating, which include Iowa, Nebraska and South Dakota.

The pure premium rate statewide is increasing 5.7%, with the loss experience component decreasing 9.5% and definitional changes offsetting with a 16.8% increase. Insurers will be required to adjust their expense load, known as a Loss Cost Multiplier, to take out trend, tail development, and loss adjustment expense when adopting the 2023 rate sets. Many SFM policyholders could see a decrease in premium next year, although in some cases this may be offset by changes in payroll and individual loss experience.

Here’s a little more information from the Minnesota Workers’ Compensation Insurers Association newsletter on the data that will now be included in the Minnesota rates:

• Trend data: This accounts for the difference in cost between the experience period, which was in the past, and the future period for which the rates apply.
• Tail data: This accounts for the ultimate costs of claims, which can go on for years or even decades.
• Loss adjustment expenses: This accounts for costs associated with recording, managing and settling claims such as attorney fees, court expenses and claim adjuster salaries.

See additional information about the change in MWCIA Circular Letter No. 22-1809 .

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