3_BYNAC_TN_Report_NCCI_Filing%20_03_01_2026.pdf

ATTACHMENT 3

PO Box 35 - Titusville, NJ 08560 - 615.403.5369 - kwilson@bynac.com

November 3, 2025

Mr. David H. Lillard, Jr., Tennessee State Treasurer Chairman, Advisory Council on Workers' Compensation Andrew Jackson Building, 15th Floor 502 Deaderick Street Nashville, Tennessee 37243-0248

Dear Mr. Lillard:

Enclosed is the actuarial report prepared for the Tennessee Advisory Council on Workers’ Compensation (ACWC). This report contains By the Numbers Actuarial Consulting, Inc.’s (BYNAC’s) review of the National Council on Compensation Insurance, Inc. (NCCI) filing effective 3/1/26.

The estimates and analysis contained in this report are based on data provided by NCCI including the filing memorandum dated 9/24/25 and additional information provided by NCCI in support of the filing. Any discrepancy in the completeness, interpretation, or accuracy of the information used may require a revision to this report.

If you have any questions, please contact us. It is a pleasure to be of service to the ACWC.

Sincerely, Katherine Terpstra Wilson, FCAS, MAAA Vice President and Consulting Actuary

Elizabeth Long, ACAS, MAAA Principal and Consulting Actuary

TENNESSEE ADVISORY COUNCIL ON WORKERS’ COMPENSATION

ACTUARIAL REPORT

TABLE OF CONTENTS

PURPOSE

FINDINGS

OVERVIEW OF FILING

SUMMARY OF PROPOSED LOSS COST CHANGES

ESTIMATED IMPACT OF FEE SCHEDULE UPDATE

OTHER PROPOSED CHANGES

DATA

STATEWIDE INDICATION ANALYSIS

OVERVIEW

ANALYSIS OF METHODOLOGY

DEVELOPMENT

TREND

LOSS ADJUSTMENT EXPENSE

SELECTED EXPERIENCE PERIOD

QUALIFICATIONS AND LIMITATIONS

CONSULTATION

APPENDIX

BYNAC RECOMMENDATIONS

ACTUARIAL REPORT

PURPOSE

By the Numbers Actuarial Consulting, Inc. (BYNAC) has been retained by the Tennessee

Advisory Council on Workers’ Compensation (ACWC) to prepare this actuarial report to present a professional analysis of the National Council on Compensation Insurance, Inc. (NCCI)

Tennessee Workers Compensation Voluntary Loss Costs and Rating Values filing proposed to be effective 3/1/26. The basis of the analysis is the NCCI filing memorandum dated 9/24/25 and additional information provided by NCCI in support of the filing. BYNAC did not audit the premium or loss data underlying the NCCI filing, nor did we verify the accuracy of NCCI’s detail calculations. An analysis of the updates to the experience rating plan and retrospective rating plan parameters is beyond the scope of this report.

The following items will be addressed in this report:

An analysis of NCCI’s methodology in arriving at its calculation of the proposed change in loss costs and loss adjustment expense.

An examination of the appropriateness of the methodology used by NCCI in its selection of estimates employed to arrive at ultimate loss cost for past and forecast periods.

An analysis of NCCI’s selection of trend and loss adjustment expense allowance.

FINDINGS

Based on BYNAC’s review of the NCCI filing, the proposed overall voluntary loss cost level change of –2.0% effective 3/1/26 has been reasonably calculated in accordance with actuarial standards of practice.

In addition to the policy years of 2022 and 2023 underlying the filing, BYNAC reviewed paid and paid + case development and experience for policy years 2019 through 2021 in order to test the assumptions made by NCCI in selecting the data and development methods for review.

BYNAC also reviewed the selection of trend. NCCI increased the selected trend factor for indemnity from –4.5% to –4.0%. There is no change to the NCCI selected annual trend for medical of –6.0%. BYNAC selected trends for indemnity and medical of –4.0% and –5.9%, respectively.

BYNAC reviewed historical information for defense and cost containment expense (DCCE) and adjusting and other expense (AOE). BYNAC believes the NCCI loss adjustment expense (LAE) selections are well supported.

The overall indication using BYNAC’s experience, trend, and LAE selections is –3.2%

(Appendix).

OVERVIEW OF FILING

SUMMARY OF PROPOSED LOSS COST CHANGES

NCCI is proposing a decrease in loss costs based on premium and loss experience effective

3/1/26. The breakdown of the proposed changes by industry groups is as follows:

Loss Cost Industry Change Group Eff 3/1/26

Manufacturing – 2.9% Contracting – 5.8% Office & Clerical – 2.9% Goods & Services – 2.3% Miscellaneous + 2.6%

Overall – 2.0%

ESTIMATED IMPACT OF FEE SCHEDULE UPDATE

The statewide indication reflects changes to medical costs as a result of changes to the medical fee schedule update that was effective 4/1/25. The impact of the fee schedule update on medical costs is estimated to be negligible, as is the impact on overall workers compensation system costs. BYNAC believes that the impact of this change has been reasonably calculated.

OTHER PROPOSED CHANGES

NCCI proposes extending the rounding of loss costs and expected loss ratios from two decimal places to three. The goal of this proposed change is to increase the precision of loss cost adjustments, especially among low-cost class codes. For a class code like 8810 whose 3/1/25 loss cost is 0.05, an indicated change smaller than +/ – 10% would be rounded away at two decimal places. Because only comparatively large percentage changes can be reflected within two decimal places, low-cost class codes are subject to greater year-to-year pricing volatility than class codes with higher loss costs. Especially in an environment of long-term decreases in loss costs, the constraints of a two-decimal rounding convention have increased over time. The additional granularity of a third decimal place affords greater precision in the reflection of indicated changes, especially among low-cost class codes, increasing the accuracy and stability of their loss costs. This change is expected to be premium-neutral both on an overall basis as well as by industry group. BYNAC believes this change will improve the accuracy and responsiveness of loss costs for Tennessee.

DATA

The data used for the statewide indication is premium and losses for policy years 2022 and 2023, evaluated as of 12/31/24. The policy years selected are the most recent available. Combined voluntary and assigned risk data are used. Assigned risk represents approximately 8.3% of the policy year 2023 market share and 9.6% of 2022.

Consistent with the prior filing, all claims relating to the COVID-19 pandemic with accident dates between 12/1/19 and 6/30/23 have been excluded from the data used in the filing including trend and loss adjustment expense data. Wage levels used in frequency and severity calculations have been adjusted to remove the effects of shifts in employment across industry sectors related to COVID-19 in the 2020 through 2023 calendar years. NCCI expects that, to the extent COVID-

19 losses persist beyond 6/30/23, they will align with typical claim patterns and will no longer require special treatment. BYNAC agrees with this approach for the current filing, though the decision has little effect on the overall indication since losses related to COVID-19 in Tennessee are minimal and diminishing as COVID-19 rolls out of the experience period.

STATEWIDE INDICATION ANALYSIS

OVERVIEW

The statewide indicated change is based on premium and loss data for policy years 2022 and

2023. Standard earned premium is developed to ultimate to account for payroll audits that occur after the valuation date. Premium is then brought to the level of the current loss costs based on changes in loss costs since the experience period.

NCCI limits the losses underlying the indication to a state-specific per-claim threshold prior to use in determining the overall rate indication. Adjustments for development and trend are applied on a limited basis. The projected cost ratios are then adjusted to an unlimited basis using a non-catastrophe excess ratio.

Two procedures are used to estimate the future development expected on losses. In the first method, limited indemnity and medical losses are developed to ultimate on a paid plus case reserve basis. In the second method, paid losses only are developed to ultimate. NCCI selected an average of the two methods as the best estimate of ultimate losses.

An on-level factor is also applied to losses to reflect changes to statutory benefit levels

(excluding state average weekly wage (SAWW) related changes) since the experience period. A separate indemnity and medical limited cost ratio is calculated. A projected cost ratio for the proposed policy period is then calculated by applying factors for trend, to adjust the losses to an unlimited basis, and for proposed changes in benefit levels. The medical and indemnity cost ratios are added to arrive at a projected cost ratio for each policy year. The average of the projected cost ratio for the two policy years is selected by NCCI.

The final component of the proposed change is the change in loss adjustment expense. The indicated change based on experience, trend, and benefits is multiplied by the effect of the proposed change in loss-based expenses to calculate the proposed overall change.

Indicated Change Based on Experience, Trend, and Benefits:

Projected Cost Ratio Policy Year Indemnity Medical Combined

2023 0.388 0.582 0.970 2022 0.392 0.595 0.987

Selected 0.979

Change in Loss Based Expenses:

DCCE Ratio AOE Ratio LAE Ratio

Current 0.099 0.098 0.197 Proposed 0.100 0.098 0.198

Change 1.001

Overall Change – 2.0%

ANALYSIS OF METHODOLOGY

The methodology used by NCCI to calculate the statewide indication is reasonable. Both paid and paid + case loss development are used in estimating ultimate losses. These are widely used and accepted methods. Inherent in the paid + case loss development technique is the assumption that there are no changes in reserving practices. The paid loss development method provides a check to this assumption. Paid loss development assumes that there are no changes in claims settlement practices.

The use of on-level factors to bring premium to the current loss cost level is also a generally accepted technique. The use of a Tennessee-specific distribution of policy effective dates increases the accuracy of the on-level factor calculation. As a matter of simplicity, the most recent distribution is used for all policy years.

In selecting trend factors, NCCI reviews claim frequency and severity separately, adjusts the severity to the current statutory benefit level (excluding SAWW-related changes), and removes the impact of the growth in payroll over the experience period. NCCI then combines the historical frequency with the adjusted severity to produce loss ratio trend experience. Policy year loss ratio trend is used as the basis for the selection. The selection of trend factors involves a great deal of judgment and is subject to a wide range of opinion concerning the appropriate factor. The change in NCCI’s medical trend selection contributes +0.7% to the overall indication.

Five years of Tennessee-specific policy year data is used for the DCCE provision and five years of countrywide accident year data is used for AOE. The increase in the DCCE provision contributes +0.1% to the overall indication.

The methodology to limit losses in the development and trend calculations and adjust the limited cost ratio to an unlimited basis is the same as that used in the prior filing. This approach tends to decrease volatility and increase long-term stability by reducing the impact of outlier events. The loss limitation threshold is determined on a state-specific basis and is based on the total volume of premium in the period underlying the currently approved filing. As such, it changes from year to year. The base threshold for this filing is a 2.6% increase to $5,900,422. The selected statewide excess ratio of 2.9% is a decrease from the ratio of 3.1% used in the prior filing.

DEVELOPMENT

For workers compensation, the ultimate cost of claims incurred for a specific time period is usually not known until many years after the close of that period. Loss development factors project the additional cost expected on claims. The calculation and selection of development factors to be applied to paid + case indemnity losses are shown in Table 1, beginning with the age-to-age factors calculated using Tennessee’s limited paid + case policy year losses excluding

LAE. The historical and expected loss development patterns are graphically illustrated in Figure

1 by thick and thin lines, respectively. Paid indemnity development is shown in Table 2 and

Figure 2. Medical development follows in Tables 3 and 4 and Figures 3 and 4.

In a steady-state environment, the selection of longer averages increases stability from one valuation to the next and helps smooth variations due to randomness or conditions that are not expected to persist into the effective period. Meanwhile, selecting factors based on a shorter horizon is reasonable in the presence of emerging or ongoing shifts in development patterns since a shorter horizon will tend to accelerate recognition of changes that have not yet fully emerged in the available historical data. For both indemnity and medical losses, NCCI selected

3-year average factors for paid + case development and 2-year averages for paid development.

In selecting a 3-year average for paid + case loss development factors for both indemnity and medical losses, NCCI seeks to strike a balance between stability and responsiveness. When comparing the product of the 1st to 19th report age-to-to age factors, the latest valuation is the highest point in at least 8 years for both indemnity and medical development, however the prior valuation was likewise the lowest point in at least as many years. The selection of a 3-year average for paid + case development preserves stability between valuations despite volatility among individual data points. This selection is reasonable and BYNAC is in agreement with it.

For both indemnity and medical losses, NCCI selected the 2-year average for paid development factors, a selection which favors responsiveness over stability. For several years following the enactment of SB 200, the product of the 1st to 19th report age-to-age medical paid development factors exhibited steady decreases from one evaluation to the next, supporting the selection of a shorter average while the impact of emerging changes on development patterns continued to evolve. BYNAC has noted previously that the paid medical development factors may be stabilizing and should be monitored for evidence that the change is now fully reflected in the experience periods. For the current valuation, BYNAC has selected a longer 3-year average for both indemnity and medical paid development, reflecting the assumption that these factors have reached a new equilibrium. This results in cumulative development factors that are slightly lower than those based on the 2-year average for both indemnity and medical. Had NCCI used the 3-year average for paid development in its filing, the indication would have been –2.5%.

In addition to the age-to-age development factors discussed above, NCCI selected tail factors to capture development past the 19th report. Tail factors based upon unlimited paid + case data are selected separately for indemnity and medical losses and a factor is applied to adjust them to a limited basis. The paid + case tail factors are adjusted by a judgmentally selected ratio for use with paid losses. BYNAC has reviewed the methodology used to select the tail factors and finds the selections reasonable.

The standard earned premium also needs to be developed to ultimate to account for changes to earned premium such as payroll audits that are completed after the first report. Table 5 shows the premium development with the NCCI and BYNAC selections. Age to age factors from prior filings are shown for the older policy periods to illustrate the range of usual factors.

Table 6 shows both NCCI’s and BYNAC’s estimated ultimate losses and standard earned premium. For the losses, the NCCI selections are based on an average of the indicated ultimate losses using the paid + case and paid development methods. The BYNAC selections are also based on the average of the two methods. The selections are illustrated in Figures 5 and 6.

TREND

An exponential regression model is used to project the trend and is presented in Table 7. Both

BYNAC and NCCI made judgmental selections based on the frequency, severity, and loss ratio trends presented. It is important to keep in mind that the effect of statutory changes in indemnity benefits associated with the SAWW are incorporated as part of trend. NCCI does not adjust for these changes separately. NCCI selected trends of –4.0% for indemnity and –6.0% for medical in this filing. BYNAC selected trends of –4.0% for indemnity and –5.9% for medical.

BYNAC’s selections are based on the results of exponential regression on loss ratios, fit to periods since the adoption of SB 200. In making its selections, BYNAC considered the trends in frequency and severity separately to test the reasonableness of its overall selections. The loss ratio decreases have been driven by the strong downward trend in lost-time claim frequency for many years. The trend in indemnity severity is essentially flat at multiple fit points, meaning that indemnity loss ratio trend is the result almost exclusively of the frequency trend. Trend in indemnity loss ratio has been very steady in the years since the adoption of SB 200. While trend data for medical loss ratios exhibits more volatility over the same period, especially between

2019 and 2020, this volatility is potentially linked to COVID-19. Once smoothed, fits based on the years since SB 200 are expected to be predictive for medical loss ratios as well.

In BYNAC’s opinion the selection of trend factors is one of the key selections in this filing.

Because of the compounding effect of applying a given trend factor over multiple years into the future, even small differences in the selected factors have a significant impact on the overall indication. For this reason, BYNAC rounds its trend factor selections to the nearest 0.001 (or

0.1%). While NCCI has proposed a decimal extension for loss costs and expected loss ratios to

0.001 and intermediate values such as indemnity and medical pure premiums to 0.0001, it continues to select trend factors on a more heavily rounded basis. Had NCCI used a medical trend of –5.9% rather than –6.0%, the indication in the filing would have been –1.8% rather than

–2.0%.

LOSS ADJUSTMENT EXPENSE

A summary of the LAE selections is shown in Table 8. The DCCE provision is based on

Tennessee-specific policy year paid DCCE and losses. The paid DCCE to paid loss ratio is developed to ultimate using DCCE ratio development factors. AOE is calculated using countrywide information since state specific data is not available.

NCCI selected 10.0% for DCCE and 9.8% for AOE, leading to an increase in the LAE allowance from 19.7% to 19.8%. This selection is reasonable and BYNAC is in agreement with it.

SELECTED EXPERIENCE PERIOD

The loss cost level change indicated by each policy year from 2019 to 2023 is calculated in Table

9, under both NCCI and BYNAC selections for development and trend. A summary of the indications is provided in Table 10 and Figure 7. NCCI selected a two-year experience period, implying that indications derived from 2022 and 2023 experience are expected to be equally, and sufficiently, credible indicators of the prospective period. This is consistent with the experience period selected in prior filings.

As with the selection of loss development factors, the choice of experience period seeks to achieve an appropriate balance between stability and responsiveness. All else equal, selecting longer-run averages tends to favor stability while shorter-run averages tend to be more responsive to the emergence of new conditions. The presence of the pandemic in the available experience periods is a consideration in this evaluation. While direct impacts of COVID-19 have been removed from the underlying data, it is impossible to rule out indirect influences, such as temporary work stoppages and shifts to telecommuting, that may be contributing to the comparatively low indication for 2020. After reviewing the available experience periods, BYNAC selected the average of the 2021 through 2023 BYNAC indications. BYNAC selected the 3-year average to provide stability by including the available post-pandemic experience.

These years are expected to be most representative of the conditions likely to prevail in the prospective period.

Table 1

STATE OF TENNESSEE

WORKERS COMPENSATION

INDEMNITY PAID + CASE DEVELOPMENT FACTORS

A. INDEMNITY PAID + CASE AGE TO AGE FACTORS

Policy Year 1 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 10 - 11 11 - 12 12 - 13 13 - 14 14 - 15 15 - 16 16 - 17 17 - 18 18 - 19 19-Ult

2001 1.000 2002 1.000 1.000 2003 1.001 1.000 1.000 2004 1.001 0.999 1.000 1.000 2005 1.000 1.000 1.000 1.000 1.000 2006 1.000 1.000 1.000 1.000 1.002 2007 1.000 1.000 1.000 1.000 1.002 2008 1.001 0.998 1.000 1.002 0.999 2009 1.000 0.999 1.000 1.000 1.002 2010 1.001 0.995 0.999 1.001 1.000 2011 1.002 1.001 1.002 1.000 0.998 2012 1.002 0.999 1.003 1.001 0.999 2013 1.004 1.003 1.007 1.001 1.000 2014 1.008 1.003 0.999 1.001 1.001 2015 1.008 1.007 1.004 1.001 1.003 2016 1.022 1.010 1.009 1.003 1.002 2017 1.057 1.031 1.001 0.993 1.005 2018 1.121 1.061 1.016 1.018 1.000 2019 1.084 1.045 1.003 1.014 2020 1.096 1.022 1.022 2021 1.117 1.052 2022 1.148

5 Yr Avg 1.113 1.047 1.019 1.010 1.003 1.004 1.001 1.002 1.001 1.000 1.000 0.999 1.000 1.001 1.000 1.000 1.000 1.000 3 Yr Avg 1.120 1.040 1.014 1.011 1.001 1.004 1.001 1.004 1.002 1.001 0.999 1.000 1.000 1.001 1.000 1.001 1.001 1.000 5 Yr Mid 1.111 1.051 1.020 1.011 1.005 1.004 1.002 1.002 1.001 1.000 0.999 0.999 1.000 1.001 1.000 1.000 1.000 1.000 2 Yr Avg 1.133 1.037 1.013 1.016 0.997 1.004 1.002 1.002 1.001 1.001 1.000 1.000 1.000 1.002 1.000 1.001 1.001 1.000 NCCI Prior 1.101 1.042 1.016 1.010 1.003 1.003 1.001 1.002 1.002 0.999 0.999 1.000 1.000 1.001 1.000 1.000 1.000 1.000 1.001 NCCI Sel 1.120 1.040 1.014 1.011 1.001 1.004 1.001 1.004 1.002 1.001 0.999 1.000 1.000 1.001 1.000 1.001 1.001 1.000 1.001 BYNAC Sel 1.120 1.040 1.014 1.011 1.001 1.004 1.001 1.004 1.002 1.001 0.999 1.000 1.000 1.001 1.000 1.001 1.001 1.000 1.001

B. INDEMNITY PAID + CASE DEVELOPMENT FACTORS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

1.213 1.083 1.041 1.027 1.016 1.015 1.011 1.010 1.006 1.004 1.003 1.004 1.004 1.004 1.003 1.003 1.002 1.001 1.001

Figure 1

WORKERS COMPENSATION

INDEMNITY

HISTORICAL AND EXPECTED DEVELOPMENT OF PAID + CASE LOSSES

* Additional development of 0.4% is expected after the 10th report.

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1 2 3 4 5 6 7 8 9 10

M ill io ns

Policy Year Report *

Table 2

WORKERS COMPENSATION

INDEMNITY PAID DEVELOPMENT FACTORS

A. INDEMNITY PAID AGE TO AGE FACTORS

Policy Year 1 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 10 - 11 11 - 12 12 - 13 13 - 14 14 - 15 15 - 16 16 - 17 17 - 18 18 - 19 19-Ult

2001 1.000 2002 1.000 1.000 2003 1.002 1.001 1.000 2004 1.000 1.000 1.000 1.000 2005 1.001 1.001 1.000 1.000 1.000 2006 1.000 1.000 1.000 1.000 1.001 2007 1.001 1.001 1.000 1.001 1.000 2008 1.002 1.001 1.001 1.001 1.000 2009 1.001 1.001 1.001 1.001 1.001 2010 1.001 1.001 1.000 1.000 1.001 2011 1.004 1.005 1.003 1.001 1.001 2012 1.008 1.002 1.005 1.002 1.002 2013 1.011 1.008 1.010 1.005 1.002 2014 1.021 1.018 1.004 1.003 1.002 2015 1.028 1.018 1.014 1.006 1.008 2016 1.090 1.037 1.025 1.011 1.009 2017 1.182 1.084 1.027 1.016 1.008 2018 1.563 1.222 1.077 1.043 1.027 2019 1.536 1.162 1.084 1.040 2020 1.537 1.204 1.076 2021 1.556 1.201 2022 1.601

5 Yr Avg 1.559 1.194 1.082 1.035 1.021 1.012 1.007 1.005 1.004 1.002 1.001 1.001 1.001 1.001 1.000 1.000 1.000 1.000 3 Yr Avg 1.565 1.189 1.079 1.037 1.023 1.011 1.006 1.007 1.004 1.002 1.001 1.001 1.001 1.001 1.000 1.000 1.000 1.000 5 Yr Mid 1.552 1.196 1.082 1.035 1.021 1.012 1.007 1.005 1.004 1.002 1.001 1.001 1.001 1.001 1.000 1.000 1.000 1.000 2 Yr Avg 1.579 1.203 1.080 1.042 1.022 1.010 1.008 1.006 1.004 1.002 1.002 1.001 1.001 1.001 1.001 1.000 1.001 1.000 NCCI Prior 1.549 1.184 1.081 1.035 1.021 1.013 1.005 1.007 1.005 1.003 1.001 1.001 1.001 1.001 1.001 1.000 1.000 1.000 1.003 NCCI Sel 1.579 1.203 1.080 1.042 1.022 1.010 1.008 1.006 1.004 1.002 1.002 1.001 1.001 1.001 1.001 1.000 1.001 1.000 1.003 BYNAC Sel 1.565 1.189 1.079 1.037 1.023 1.011 1.006 1.007 1.004 1.002 1.001 1.001 1.001 1.001 1.000 1.000 1.000 1.000 1.003

B. INDEMNITY PAID DEVELOPMENT FACTORS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

2.208 1.411 1.187 1.100 1.061 1.037 1.026 1.020 1.013 1.009 1.007 1.006 1.005 1.004 1.003 1.003 1.003 1.003 1.003

Figure 2

WORKERS COMPENSATION

INDEMNITY

HISTORICAL AND EXPECTED DEVELOPMENT OF PAID LOSSES

* Additional development of 0.9% is expected after the 10th report.

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1 2 3 4 5 6 7 8 9 10

M ill io ns

Table 3

WORKERS COMPENSATION

MEDICAL PAID + CASE DEVELOPMENT FACTORS

A. MEDICAL PAID + CASE AGE TO AGE FACTORS

Policy Year 1 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 10 - 11 11 - 12 12 - 13 13 - 14 14 - 15 15 - 16 16 - 17 17 - 18 18 - 19 19 - Ult

2001 0.987 2002 0.998 1.003 2003 0.998 0.997 0.995 2004 1.001 0.995 1.001 1.005 2005 1.000 0.995 0.997 0.997 1.003 2006 0.999 0.993 0.991 1.000 1.003 2007 0.995 0.996 0.999 0.997 1.001 2008 1.006 0.999 1.004 1.003 1.006 2009 1.004 1.000 0.991 1.000 1.003 2010 1.002 0.983 1.005 0.998 0.998 2011 0.998 1.003 1.003 0.999 0.997 2012 0.998 1.007 1.001 0.995 1.001 2013 1.007 1.002 0.998 1.005 1.013 2014 0.997 1.004 0.996 1.000 0.996 2015 1.014 1.001 1.013 1.006 1.006 2016 1.010 1.003 1.014 1.000 1.009 2017 0.976 1.006 0.999 0.997 1.005 2018 0.973 1.005 1.002 0.996 0.997 2019 1.013 1.020 0.984 1.006 2020 0.977 0.973 1.005 2021 0.976 0.975 2022 1.012

5 Yr Avg 0.990 0.990 1.001 1.004 1.001 1.006 1.002 1.002 1.001 1.000 1.002 0.996 0.999 1.000 0.998 0.998 0.999 0.999 3 Yr Avg 0.988 0.989 0.997 1.000 1.003 1.006 1.004 1.001 1.001 1.004 1.002 0.995 1.001 1.002 0.998 0.999 1.000 1.001 5 Yr Mid 0.988 0.985 1.004 1.003 0.998 1.005 1.002 1.001 1.002 1.001 1.002 0.997 0.999 1.001 0.998 0.998 0.999 1.000 2 Yr Avg 0.994 0.974 0.995 1.001 0.997 1.003 1.008 1.003 1.001 1.004 1.000 0.998 0.999 1.003 1.002 1.001 1.000 1.004 NCCI Prior 0.990 0.999 0.997 0.999 1.004 1.006 1.001 1.002 1.003 0.994 1.001 0.996 1.000 0.998 0.994 0.997 0.998 1.001 0.995 NCCI Sel 0.988 0.989 0.997 1.000 1.003 1.006 1.004 1.001 1.001 1.004 1.002 0.995 1.001 1.002 0.998 0.999 1.000 1.001 0.995 BYNAC Sel 0.988 0.989 0.997 1.000 1.003 1.006 1.004 1.001 1.001 1.004 1.002 0.995 1.001 1.002 0.998 0.999 1.000 1.001 0.995

B. MEDICAL PAID + CASE DEVELOPMENT FACTORS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

0.986 0.998 1.009 1.012 1.012 1.009 1.003 0.999 0.998 0.997 0.993 0.991 0.996 0.995 0.993 0.995 0.996 0.996 0.995

Figure 3

WORKERS COMPENSATION

MEDICAL

HISTORICAL AND EXPECTED DEVELOPMENT OF PAID + CASE LOSSES

* Additional development of -0.3% is expected after the 10th report.

100.0

125.0

150.0

175.0

200.0

225.0

1 2 3 4 5 6 7 8 9 10

M ill io ns

Table 4

WORKERS COMPENSATION

MEDICAL PAID DEVELOPMENT FACTORS

A. MEDICAL PAID AGE TO AGE FACTORS

Policy Year 1 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 10 - 11 11 - 12 12 - 13 13 - 14 14 - 15 15 - 16 16 - 17 17 - 18 18 - 19 19 - Ult

2001 1.003 2002 1.007 1.004 2003 1.006 1.006 1.004 2004 1.007 1.007 1.007 1.005 2005 1.007 1.007 1.004 1.005 1.005 2006 1.010 1.007 1.007 1.007 1.007 2007 1.009 1.007 1.008 1.007 1.010 2008 1.011 1.010 1.009 1.009 1.008 2009 1.011 1.007 1.007 1.011 1.009 2010 1.012 1.011 1.008 1.010 1.008 2011 1.012 1.009 1.007 1.005 1.005 2012 1.012 1.010 1.006 1.008 1.009 2013 1.016 1.011 1.009 1.008 1.010 2014 1.011 1.013 1.008 1.007 1.008 2015 1.025 1.012 1.014 1.015 1.011 2016 1.031 1.020 1.025 1.010 1.012 2017 1.063 1.026 1.025 1.012 1.005 2018 1.202 1.056 1.027 1.015 1.011 2019 1.189 1.058 1.031 1.015 2020 1.209 1.061 1.019 2021 1.215 1.069 2022 1.240

5 Yr Avg 1.211 1.061 1.027 1.020 1.014 1.012 1.012 1.010 1.009 1.009 1.008 1.008 1.009 1.008 1.007 1.007 1.006 1.004 3 Yr Avg 1.221 1.063 1.026 1.018 1.016 1.010 1.012 1.009 1.007 1.008 1.007 1.007 1.009 1.009 1.007 1.007 1.006 1.005 5 Yr Mid 1.209 1.061 1.028 1.020 1.012 1.012 1.012 1.010 1.008 1.010 1.008 1.009 1.009 1.008 1.007 1.007 1.007 1.004 2 Yr Avg 1.228 1.065 1.025 1.015 1.012 1.008 1.014 1.009 1.008 1.009 1.007 1.008 1.010 1.009 1.008 1.009 1.006 1.005 NCCI Prior 1.213 1.060 1.029 1.020 1.019 1.012 1.012 1.008 1.007 1.008 1.007 1.009 1.010 1.009 1.007 1.006 1.006 1.005 1.064 NCCI Sel 1.228 1.065 1.025 1.015 1.012 1.008 1.014 1.009 1.008 1.009 1.007 1.008 1.010 1.009 1.008 1.009 1.006 1.005 1.059 BYNAC Sel 1.221 1.063 1.026 1.018 1.016 1.010 1.012 1.009 1.007 1.008 1.007 1.007 1.009 1.009 1.007 1.007 1.006 1.005 1.059

B. MEDICAL PAID LOSS DEVELOPMENT FACTORS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

1.617 1.324 1.246 1.214 1.193 1.174 1.162 1.148 1.138 1.130 1.121 1.113 1.105 1.095 1.085 1.077 1.070 1.064 1.059

Figure 4

WORKERS COMPENSATION

MEDICAL

HISTORICAL AND EXPECTED DEVELOPMENT OF PAID LOSSES

* Additional development of 13.0% is expected after the 10th report.

100.0

125.0

150.0

175.0

200.0

225.0

1 2 3 4 5 6 7 8 9 10

M ill io ns

Table 5

WORKERS COMPENSATION

PREMIUM DEVELOPMENT FACTORS

A. PREMIUM AGE TO AGE FACTORS

Policy Year 1 - 2 2 - 3 3 - 4 4 - 5 5-Ult

2015 1.009 1.001 1.000 0.999 2016 1.009 1.000 1.000 1.000 2017 1.012 1.000 1.001 1.000 2018 1.012 1.000 0.999 1.000 2019 1.008 0.999 1.000 1.000 2020 1.019 0.999 1.000 2021 1.024 0.998 2022 1.021

5 Yr Avg 1.017 0.999 1.000 1.000 3 Yr Avg 1.021 0.999 1.000 1.000 5 Yr Mid 1.017 0.999 1.000 1.000 2 Yr Avg 1.023 0.999 1.000 1.000 NCCI Prior 1.017 1.000 1.000 1.000 1.000 NCCI Sel 1.021 0.999 1.000 1.000 1.000 BYNAC Sel 1.021 0.999 1.000 1.000 1.000

B. PREMIUM LOSS DEVELOPMENT FACTORS

1 2 3 4 5

1.020 0.999 1.000 1.000 1.000

Table 6

WORKERS COMPENSATION

DETERMINATION OF PREMIUM AND LOSSES DEVELOPED TO ULTIMATE REPORT

Section A - Policy Year 2023 Experience NCCI BYNAC

(1) Standard Earned Premium $463,085,287 $463,085,287

(2) Factor to Develop Premium to Ultimate 1.020 1.020

(3) Standard Earned Premium Developed to Ultimate = (1)x(2) $472,346,993 $472,346,993

(4) Limited Indemnity Paid Losses $61,833,653 $61,833,653

(5) Limited Indemnity Paid Development Factor to Ultimate 2.274 2.208

(6) Limited Indemnity Paid Losses Developed to Ultimate = (4)x(5) $140,609,727 $136,528,706

(7) Limited Indemnity Paid+Case Losses $112,699,126 $112,699,126

(8) Limited Indemnity Paid+Case Development Factor to Ultimate 1.213 1.213

(9) Limited Indemnity Paid+Case Losses Developed to Ultimate = (7)x(8) $136,704,040 $136,704,040

(10) Policy Year 2023 Limited Indemnity Losses Developed to Ultimate $138,656,884 $136,616,373 NCCI and BYNAC = [(6)+(9)]/2

(11) Limited Medical Paid Losses $142,030,338 $142,030,338

(12) Limited Medical Paid Development Factor to Ultimate 1.626 1.617

(13) Limited Medical Paid Losses Developed to Ultimate = (11)x(12) $230,941,330 $229,663,057

(14) Limited Medical Paid+Case Losses $216,737,893 $216,737,893

(15) Limited Medical Paid+Case Development Factor to Ultimate 0.986 0.986

(16) Limited Medical Paid+Case Losses Developed to Ultimate = (14)x(15) $213,703,562 $213,703,562

(17) Policy Year 2023 Limited Medical Losses Developed to Ultimate $222,322,446 $221,683,310 NCCI and BYNAC = [(13)+(16)]/2

Section B - Policy Year 2022 Experience NCCI BYNAC

(1) Standard Earned Premium $488,764,018 $488,764,018

(2) Factor to Develop Premium to Ultimate 0.999 0.999

(3) Standard Earned Premium Developed to Ultimate = (1)x(2) $488,275,254 $488,275,254

(4) Limited Indemnity Paid Losses $95,475,778 $95,475,778

(5) Limited Indemnity Paid Development Factor to Ultimate 1.440 1.411

(6) Limited Indemnity Paid Losses Developed to Ultimate = (4)x(5) $137,485,120 $134,716,323

(7) Limited Indemnity Paid+Case Losses $122,219,451 $122,219,451

(8) Limited Indemnity Paid+Case Development Factor to Ultimate 1.083 1.083

(9) Limited Indemnity Paid+Case Losses Developed to Ultimate = (7)x(8) $132,363,665 $132,363,665

(10) Policy Year 2022 Limited Indemnity Losses Developed to Ultimate $134,924,393 $133,539,994 NCCI and BYNAC = [(6)+(9)]/2

(11) Limited Medical Paid Losses $171,176,636 $171,176,636

(12) Limited Medical Paid Development Factor to Ultimate 1.324 1.324

(13) Limited Medical Paid Losses Developed to Ultimate = (11)x(12) $226,637,866 $226,637,866

(14) Limited Medical Paid+Case Losses $220,423,117 $220,423,117

(15) Limited Medical Paid+Case Development Factor to Ultimate 0.998 0.998

(16) Limited Medical Paid+Case Losses Developed to Ultimate = (14)x(15) $219,982,271 $219,982,271

(17) Policy Year 2022 Limited Medical Losses Developed to Ultimate $223,310,069 $223,310,069 NCCI and BYNAC = [(13)+(16)]/2

Table 6 (Continued)

WORKERS COMPENSATION

DETERMINATION OF PREMIUM AND LOSSES DEVELOPED TO ULTIMATE REPORT

Section C - Policy Year 2021 Experience NCCI BYNAC

(1) Standard Earned Premium $463,229,431 $463,229,431

(2) Factor to Develop Premium to Ultimate 1.000 1.000

(3) Standard Earned Premium Developed to Ultimate = (1)x(2) $463,229,431 $463,229,431

(4) Limited Indemnity Paid Losses $101,530,716 $101,530,716

(5) Limited Indemnity Paid Development Factor to Ultimate 1.197 1.187

(6) Limited Indemnity Paid Losses Developed to Ultimate = (4)x(5) $121,532,267 $120,516,960

(7) Limited Indemnity Paid+Case Losses $115,461,546 $115,461,546

(8) Limited Indemnity Paid+Case Development Factor to Ultimate 1.041 1.041

(9) Limited Indemnity Paid+Case Losses Developed to Ultimate = (7)x(8) $120,195,469 $120,195,469

(10) Policy Year 2021 Limited Indemnity Losses Developed to Ultimate $120,863,868 $120,356,215 NCCI and BYNAC = [(6)+(9)]/2

(11) Limited Medical Paid Losses $162,763,366 $162,763,366

(12) Limited Medical Paid Development Factor to Ultimate 1.243 1.246

(13) Limited Medical Paid Losses Developed to Ultimate = (11)x(12) $202,314,864 $202,803,154

(14) Limited Medical Paid+Case Losses $194,925,911 $194,925,911

(15) Limited Medical Paid+Case Development Factor to Ultimate 1.009 1.009

(16) Limited Medical Paid+Case Losses Developed to Ultimate = (14)x(15) $196,680,244 $196,680,244

(17) Policy Year 2021 Limited Medical Losses Developed to Ultimate $199,497,554 $199,741,699 NCCI and BYNAC = [(13)+(16)]/2

Section D - Policy Year 2020 Experience NCCI BYNAC

(1) Standard Earned Premium $441,586,842 $441,586,842

(2) Factor to Develop Premium to Ultimate 1.000 1.000

(3) Standard Earned Premium Developed to Ultimate = (1)x(2) $441,586,842 $441,586,842

(4) Limited Indemnity Paid Losses $100,017,660 $100,017,660

(5) Limited Indemnity Paid Development Factor to Ultimate 1.108 1.100

(6) Limited Indemnity Paid Losses Developed to Ultimate = (4)x(5) $110,819,567 $110,019,426

(7) Limited Indemnity Paid+Case Losses $110,677,091 $110,677,091

(8) Limited Indemnity Paid+Case Development Factor to Ultimate 1.027 1.027

(9) Limited Indemnity Paid+Case Losses Developed to Ultimate = (7)x(8) $113,665,372 $113,665,372

(10) Policy Year 2020 Limited Indemnity Losses Developed to Ultimate $112,242,470 $111,842,399 NCCI and BYNAC = [(6)+(9)]/2

(11) Limited Medical Paid Losses $147,721,095 $147,721,095

(12) Limited Medical Paid Development Factor to Ultimate 1.213 1.214

(13) Limited Medical Paid Losses Developed to Ultimate = (11)x(12) $179,185,688 $179,333,409

(14) Limited Medical Paid+Case Losses $165,206,042 $165,206,042

(15) Limited Medical Paid+Case Development Factor to Ultimate 1.012 1.012

(16) Limited Medical Paid+Case Losses Developed to Ultimate = (14)x(15) $167,188,515 $167,188,515

(17) Policy Year 2020 Limited Medical Losses Developed to Ultimate $173,187,102 $173,260,962

Table 6 (Continued)

WORKERS COMPENSATION

DETERMINATION OF PREMIUM AND LOSSES DEVELOPED TO ULTIMATE REPORT

Section E - Policy Year 2019 Experience NCCI BYNAC

(1) Standard Earned Premium $465,238,820 $465,238,820

(2) Factor to Develop Premium to Ultimate 1.000 1.000

(3) Standard Earned Premium Developed to Ultimate = (1)x(2) $465,238,820 $465,238,820

(4) Limited Indemnity Paid Losses $104,587,525 $104,587,525

(5) Limited Indemnity Paid Development Factor to Ultimate 1.063 1.061

(6) Limited Indemnity Paid Losses Developed to Ultimate = (4)x(5) $111,176,539 $110,967,364

(7) Limited Indemnity Paid+Case Losses $111,453,908 $111,453,908

(8) Limited Indemnity Paid+Case Development Factor to Ultimate 1.016 1.016

(9) Limited Indemnity Paid+Case Losses Developed to Ultimate = (7)x(8) $113,237,171 $113,237,171

(10) Policy Year 2019 Limited Indemnity Losses Developed to Ultimate $112,206,855 $112,102,268 NCCI and BYNAC = [(6)+(9)]/2

(11) Limited Medical Paid Losses $174,047,039 $174,047,039

(12) Limited Medical Paid Development Factor to Ultimate 1.195 1.193

(13) Limited Medical Paid Losses Developed to Ultimate = (11)x(12) $207,986,212 $207,638,118

(14) Limited Medical Paid+Case Losses $199,400,789 $199,400,789

(15) Limited Medical Paid+Case Development Factor to Ultimate 1.012 1.012

(16) Limited Medical Paid+Case Losses Developed to Ultimate = (14)x(15) $201,793,598 $201,793,598

(17) Policy Year 2019 Limited Medical Losses Developed to Ultimate $204,889,905 $204,715,858

Figure 5

WORKERS COMPENSATION

INDEMNITY

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES

112.1 111.8

120.4

133.5 136.6

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

2019 2020 2021 2022 2023

M ill io ns

Policy Year

NCCI Paid+Case NCCI Paid BYNAC Paid+Case BYNAC Paid BYNAC Selected

Figure 6

WORKERS COMPENSATION

MEDICAL

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES

204.7

173.3

199.7

223.3 221.7

50.0

100.0

150.0

200.0

250.0

2019 2020 2021 2022 2023

M ill io ns

Policy Year

NCCI Paid+Case NCCI Paid BYNAC Paid+Case BYNAC Paid BYNAC Selected

Table 7

WORKERS COMPENSATION

TREND

Lost-Time Indemnity Medical Policy Claim Avg Cost Loss Avg Cost Loss Year Frequency Per Case Ratio Per Case Ratio

2009 39,591 27,173 1.075 46,266 1.830 2010 41,980 24,823 1.042 39,747 1.668 2011 37,558 24,228 0.910 38,215 1.435 2012 36,858 23,693 0.873 39,904 1.471 2013 33,709 22,683 0.765 40,394 1.362 2014 32,458 21,319 0.691 37,543 1.218 2015 29,613 21,016 0.623 38,231 1.133 2016 26,382 21,252 0.561 38,670 1.021 2017 25,573 21,588 0.552 39,747 1.016 2018 23,931 22,250 0.533 38,473 0.921 2019 23,272 21,959 0.511 41,190 0.959 2020 23,796 20,389 0.486 31,835 0.758 2021 22,497 20,333 0.457 33,684 0.758 2022 20,461 22,154 0.453 36,666 0.750 2023 19,426 22,157 0.430 35,455 0.689

3 Point Exponential – 7.1% + 4.4% – 3.0% + 2.6% – 4.7% 5 Point Exponential – 5.0% + 1.0% – 4.1% – 1.6% – 6.5% 6 Point Exponential – 4.2% + 0.0% – 4.2% – 2.0% – 6.1% 7 Point Exponential – 4.1% – 0.0% – 4.1% – 2.3% – 6.3% 8 Point Exponential – 4.0% + 0.1% – 3.9% – 2.0% – 5.9% 10 Point Exponential – 4.9% + 0.2% – 4.7% – 1.3% – 6.1% 12 Point Exponential – 5.3% – 0.5% – 5.8% – 1.3% – 6.5% 15 Point Exponential – 5.4% – 1.3% – 6.6% – 1.3% – 6.6%

NCCI Prior Selected Annual Trend – 4.5% – 6.0% NCCI Selected Annual Trend – 4.0% – 6.0% BYNAC Selected Annual Trend – 4.0% – 5.9%

NCCI Selected Annual Trend Factor 0.960 0.940 BYNAC Selected Annual Trend Factor 0.960 0.941

Table 8

WORKERS COMPENSATION

LOSS ADJUSTMENT EXPENSE

NCCI NCCI

Tennessee Countrywide

PY Developed AY Developed Total Year DCCE Ratio AOE Ratio LAE Ratio

2019 9.6% 2020 10.2% 10.4% 2021 9.9% 10.1% 2022 10.0% 9.8% 2023 10.0% 9.7% 2024 9.9%

5 Year Average 9.9% 10.0% 3 Year Average 10.0% 9.8%

NCCI Prior Selected 9.9% 9.8% 19.7% NCCI Selected 10.0% 9.8% 19.8% BYNAC Selected 10.0% 9.8% 19.8%

Proposed Change in LAE Allowance

Current Tennessee LAE Allowance 19.7%

NCCI Proposed LAE Allowance 19.8% Proposed Change in LAE 0.1%

BYNAC Proposed LAE Allowance 19.8% Proposed Change in LAE 0.1%

Table 9

WORKERS COMPENSATION

DETERMINATION OF INDICATED LOSS COST LEVEL CHANGE

Section A - Policy Year 2023 Experience NCCI BYNAC

Premium:

(1) Standard Earned Premium Developed to Ultimate (Table 6) $472,346,993 $472,346,993

(2) Premium On-level Factor 0.682 0.682

(3) Premium Available for Benefit Costs = (1) x (2) $322,140,649 $322,140,649

Indemnity Benefit Cost:

(4) Limited Indemnity Losses Developed to Ultimate (Table 6) $138,656,884 $136,616,373

(5) Indemnity Loss On-level Factor 1.000 1.000

(6) Adjusted Limited Indemnity Losses = (4) x (5) $138,656,884 $136,616,373

(7) Adjusted Limited Indemnity Cost Ratio excluding Trend and Benefits = (6) / (3) 0.430 0.424

(8) Factor to Reflect Indemnity Trend 0.877 0.877

(9) Projected Limited Indemnity Cost Ratio = (7) x (8) 0.377 0.372

(10) Factor to Adjust Indemnity Cost Ratio to an Unlimited Basis 1.030 1.030

(11) Projected Indemnity Cost Ratio = (9) x (10) 0.388 0.383

(12) Factor to Reflect Proposed Changes in Indemnity Benefits 1.000 1.000

(13) Projected Indemnity Cost Ratio including Benefit Changes = (11) x (12) 0.388 0.383

Medical Benefit Cost:

(14) Limited Medical Losses Developed to Ultimate (Table 6) $222,322,446 $221,683,310

(15) Medical Loss On-level Factor 0.998 0.998

(16) Adjusted Limited Medical Losses = (14) x (15) $221,877,801 $221,239,943

(17) Adjusted Limited Medical Cost Ratio excluding Trend and Benefits = (16) / (3) 0.689 0.687

(18) Factor to Reflect Medical Trend 0.820 0.822

(19) Projected Limited Medical Cost Ratio = (17) x (18) 0.565 0.565

(20) Factor to Adjust Medical Cost Ratio to an Unlimited Basis 1.030 1.030

(21) Projected Medical Cost Ratio = (19) x (20) 0.582 0.582

(22) Factor to Reflect Proposed Changes in Medical Benefits 1.000 1.000

(23) Projected Medical Cost Ratio including Benefit Changes = (21) x (22) 0.582 0.582

Total Benefit Cost:

(24) Indicated Change Based on Experience, Trend and Benefits = (13) + (23) 0.970 0.965

Table 9 (Continued)

WORKERS COMPENSATION

DETERMINATION OF INDICATED LOSS COST LEVEL CHANGE

Section B - Policy Year 2022 Experience NCCI BYNAC

Premium:

(1) Standard Earned Premium Developed to Ultimate (Table 6) $488,275,254 $488,275,254

(2) Premium On-level Factor 0.610 0.610

(3) Premium Available for Benefit Costs = (1) x (2) $297,847,905 $297,847,905

Indemnity Benefit Cost:

(4) Limited Indemnity Losses Developed to Ultimate (Table 6) $134,924,393 $133,539,994

(5) Indemnity Loss On-level Factor 1.001 1.001

(6) Adjusted Limited Indemnity Losses = (4) x (5) $135,059,317 $133,673,534

(7) Adjusted Limited Indemnity Cost Ratio excluding Trend and Benefits = (6) / (3) 0.453 0.449

(8) Factor to Reflect Indemnity Trend 0.842 0.842

(9) Projected Limited Indemnity Cost Ratio = (7) x (8) 0.381 0.378

(10) Factor to Adjust Indemnity Cost Ratio to an Unlimited Basis 1.030 1.030

(11) Projected Indemnity Cost Ratio = (9) x (10) 0.392 0.389

(12) Factor to Reflect Proposed Changes in Indemnity Benefits 1.000 1.000

(13) Projected Indemnity Cost Ratio including Benefit Changes = (11) x (12) 0.392 0.389

Medical Benefit Cost:

(14) Limited Medical Losses Developed to Ultimate (Table 6) $223,310,069 $223,310,069

(15) Medical Loss On-level Factor 1.001 1.001

(16) Adjusted Limited Medical Losses = (14) x (15) $223,533,379 $223,533,379

(17) Adjusted Limited Medical Cost Ratio excluding Trend and Benefits = (16) / (3) 0.750 0.750

(18) Factor to Reflect Medical Trend 0.770 0.774

(19) Projected Limited Medical Cost Ratio = (17) x (18) 0.578 0.581

(20) Factor to Adjust Medical Cost Ratio to an Unlimited Basis 1.030 1.030

(21) Projected Medical Cost Ratio = (19) x (20) 0.595 0.598

(22) Factor to Reflect Proposed Changes in Medical Benefits 1.000 1.000

(23) Projected Medical Cost Ratio including Benefit Changes = (21) x (22) 0.595 0.598

Total Benefit Cost:

(24) Indicated Change Based on Experience, Trend and Benefits = (13) + (23) 0.987 0.987

WORKERS COMPENSATION

DETERMINATION OF INDICATED LOSS COST LEVEL CHANGE

Section C - Policy Year 2021 Experience NCCI BYNAC

Premium:

(1) Standard Earned Premium Developed to Ultimate (Table 6) $463,229,431 $463,229,431

(2) Premium On-level Factor 0.571 0.571

(3) Premium Available for Benefit Costs = (1) x (2) $264,504,005 $264,504,005

Indemnity Benefit Cost:

(4) Limited Indemnity Losses Developed to Ultimate (Table 6) $120,863,868 $120,356,215

(5) Indemnity Loss On-level Factor 1.001 1.001

(6) Adjusted Limited Indemnity Losses = (4) x (5) $120,984,732 $120,476,571

(7) Adjusted Limited Indemnity Cost Ratio excluding Trend and Benefits = (6) / (3) 0.457 0.455

(8) Factor to Reflect Indemnity Trend 0.808 0.808

(9) Projected Limited Indemnity Cost Ratio = (7) x (8) 0.369 0.368

(10) Factor to Adjust Indemnity Cost Ratio to an Unlimited Basis 1.030 1.030

(11) Projected Indemnity Cost Ratio = (9) x (10) 0.380 0.379

(12) Factor to Reflect Proposed Changes in Indemnity Benefits 1.000 1.000

(13) Projected Indemnity Cost Ratio including Benefit Changes = (11) x (12) 0.380 0.379

Medical Benefit Cost:

(14) Limited Medical Losses Developed to Ultimate (Table 6) $199,497,554 $199,741,699

(15) Medical Loss On-level Factor 1.005 1.005

(16) Adjusted Limited Medical Losses = (14) x (15) $200,495,042 $200,740,407

(17) Adjusted Limited Medical Cost Ratio excluding Trend and Benefits = (16) / (3) 0.758 0.759

(18) Factor to Reflect Medical Trend 0.724 0.728

(19) Projected Limited Medical Cost Ratio = (17) x (18) 0.549 0.553

(20) Factor to Adjust Medical Cost Ratio to an Unlimited Basis 1.030 1.030

(21) Projected Medical Cost Ratio = (19) x (20) 0.565 0.570

(22) Factor to Reflect Proposed Changes in Medical Benefits 1.000 1.000

(23) Projected Medical Cost Ratio including Benefit Changes = (21) x (22) 0.565 0.570

Total Benefit Cost:

(24) Indicated Change Based on Experience, Trend and Benefits = (13) + (23) 0.945 0.949

WORKERS COMPENSATION

DETERMINATION OF INDICATED LOSS COST LEVEL CHANGE

Section D - Policy Year 2020 Experience NCCI BYNAC

Premium:

(1) Standard Earned Premium Developed to Ultimate (Table 6) $441,586,842 $441,586,842

(2) Premium On-level Factor 0.524 0.524

(3) Premium Available for Benefit Costs = (1) x (2) $231,391,505 $231,391,505

Indemnity Benefit Cost:

(4) Limited Indemnity Losses Developed to Ultimate (Table 6) $112,242,470 $111,842,399

(5) Indemnity Loss On-level Factor 1.001 1.001

(6) Adjusted Limited Indemnity Losses = (4) x (5) $112,354,712 $111,954,241

(7) Adjusted Limited Indemnity Cost Ratio excluding Trend and Benefits = (6) / (3) 0.486 0.484

(8) Factor to Reflect Indemnity Trend 0.776 0.776

(9) Projected Limited Indemnity Cost Ratio = (7) x (8) 0.377 0.376

(10) Factor to Adjust Indemnity Cost Ratio to an Unlimited Basis 1.030 1.030

(11) Projected Indemnity Cost Ratio = (9) x (10) 0.388 0.387

(12) Factor to Reflect Proposed Changes in Indemnity Benefits 1.000 1.000

(13) Projected Indemnity Cost Ratio including Benefit Changes = (11) x (12) 0.388 0.387

Medical Benefit Cost:

(14) Limited Medical Losses Developed to Ultimate (Table 6) $173,187,102 $173,260,962

(15) Medical Loss On-level Factor 1.013 1.013

(16) Adjusted Limited Medical Losses = (14) x (15) $175,438,534 $175,513,355

(17) Adjusted Limited Medical Cost Ratio excluding Trend and Benefits = (16) / (3) 0.758 0.759

(18) Factor to Reflect Medical Trend 0.681 0.685

(19) Projected Limited Medical Cost Ratio = (17) x (18) 0.516 0.520

(20) Factor to Adjust Medical Cost Ratio to an Unlimited Basis 1.030 1.030

(21) Projected Medical Cost Ratio = (19) x (20) 0.531 0.536

(22) Factor to Reflect Proposed Changes in Medical Benefits 1.000 1.000

(23) Projected Medical Cost Ratio including Benefit Changes = (21) x (22) 0.531 0.536

Total Benefit Cost:

(24) Indicated Change Based on Experience, Trend and Benefits = (13) + (23) 0.919 0.923

WORKERS COMPENSATION

DETERMINATION OF INDICATED LOSS COST LEVEL CHANGE

Section E - Policy Year 2019 Experience NCCI BYNAC

Premium:

(1) Standard Earned Premium Developed to Ultimate (Table 6) $465,238,820 $465,238,820

(2) Premium On-level Factor 0.472 0.472

(3) Premium Available for Benefit Costs = (1) x (2) $219,592,723 $219,592,723

Indemnity Benefit Cost:

(4) Limited Indemnity Losses Developed to Ultimate (Table 6) $112,206,855 $112,102,268

(5) Indemnity Loss On-level Factor 1.001 1.001

(6) Adjusted Limited Indemnity Losses = (4) x (5) $112,319,062 $112,214,370

(7) Adjusted Limited Indemnity Cost Ratio excluding Trend and Benefits = (6) / (3) 0.511 0.511

(8) Factor to Reflect Indemnity Trend 0.745 0.745

(9) Projected Limited Indemnity Cost Ratio = (7) x (8) 0.381 0.381

(10) Factor to Adjust Indemnity Cost Ratio to an Unlimited Basis 1.030 1.030

(11) Projected Indemnity Cost Ratio = (9) x (10) 0.392 0.392

(12) Factor to Reflect Proposed Changes in Indemnity Benefits 1.000 1.000

(13) Projected Indemnity Cost Ratio including Benefit Changes = (11) x (12) 0.392 0.392

Medical Benefit Cost:

(14) Limited Medical Losses Developed to Ultimate (Table 6) $204,889,905 $204,715,858

(15) Medical Loss On-level Factor 1.028 1.028

(16) Adjusted Limited Medical Losses = (14) x (15) $210,626,822 $210,447,902

(17) Adjusted Limited Medical Cost Ratio excluding Trend and Benefits = (16) / (3) 0.959 0.958

(18) Factor to Reflect Medical Trend 0.640 0.645

(19) Projected Limited Medical Cost Ratio = (17) x (18) 0.614 0.618

(20) Factor to Adjust Medical Cost Ratio to an Unlimited Basis 1.030 1.030

(21) Projected Medical Cost Ratio = (19) x (20) 0.632 0.637

(22) Factor to Reflect Proposed Changes in Medical Benefits 1.000 1.000

(23) Projected Medical Cost Ratio including Benefit Changes = (21) x (22) 0.632 0.637

Total Benefit Cost:

(24) Indicated Change Based on Experience, Trend and Benefits = (13) + (23) 1.024 1.029

Table 10

WORKERS COMPENSATION

DETERMINATION OF INDICATED LOSS COST LEVEL CHANGE

Indicated Change Based on Experience, Trend, and Benefits

Policy Year NCCI BYNAC

2019 1.024 1.029 2020 0.919 0.923 2021 0.945 0.949 2022 0.987 0.987 2023 0.970 0.965

Selected 0.979 0.967

Application of the Premium Offset and Change in Loss-based Expenses

Indicated Loss Cost Level Change 0.979 0.967

Effect of the Change In Loss-Based Expenses 1.001 1.001 Indicated Change Modified for Expense Change 0.980 0.968

Indicated Change as Percentage – 2.0% – 3.2%

Figure 7

WORKERS COMPENSATION

PROJECTED COST RATIO INCLUDING BENEFIT CHANGES

1.029

0.923 0.949

0.987

0.965 0.979 0.967

0.000

0.200

0.400

0.600

0.800

1.000

1.200

2019 2020 2021 2022 2023 2026 2026

Pr oj ec te d Co st R at io

Policy Year

BYNAC Projected Cost Ratio NCCI Selected BYNAC Selected

QUALIFICATIONS AND LIMITATIONS

The estimates contained in this report depend upon the following:

The actuarial assumptions, quantitative analysis, and professional judgment expressed in this report.

The reliability of loss experience to serve as an indicator of future losses.

The completeness and accuracy of data provided by NCCI.

Material…