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Rate Filing: Medical/Indemnity Split

In each rate filing, exhibits show the split between medical and indemnity losses, expressed as a percent.;

Overview

The rising cost of medical care is a major issue facing the workers compensation industry. The portion of workers compensation benefits attributable to medical costs have grown over the last two decades, and Indiana’s portion has always been higher than the countrywide average.

 

Category

Medical

Indemnity

Country – 1986

45%

55%

Country – 2006

59%

41%

Indiana –

projected to midpoint of policy year 2016

73%

27%

 

Data from Indiana Rate Filings

In each rate filing, exhibits show the split between medical and indemnity losses, expressed as a percent.

 

Percent
Filing
Indemnity
Medical
1/1/1999
35%
65%
7/1/1999
35%
65%
1/1/2000
35%
65%
7/1/2000
35%
65%
1/1/2001
38%
62%
1/1/2002
38%
62%
1/1/2003
37%
63%
1/1/2004
35%
65%
1/1/2005
35%
65%
1/1/2006
28%
72%
1/1/2007
27%
73%
1/1/2008
26%
74%
1/1/2009
27%
73%
1/1/2010
25%
75%
1/1/2011
26%
74%
1/1/2012
26%
74%
1/1/2013
25%
75%
1/1/2014
24%
76%
1/1/2015
25%
75%
1/1/2016 ​24% ​76%
1/1/2017
27%
73%

 

Each rate filing may show the ratios in different exhibits.

For the 1/1/1999, 1/1/2000, and 1/1/2001 filings, here's where you find the numbers and how to calculate the split:

Source
1/1/1999
1/1/2000
1/1/2001
1. Exhibit I-A, policy year, line 16, the indemnity ratio is
0.248
0.254
.280
2. Exhibit I-B, policy year, line 16, the indemnity ratio is
0.270
0.267
.298
3. Add lines (1+2) to get a sum
0.518
0.521
.578
4. Exhibit I-A, policy year, line 28, the medical ratio is
0.710
0.739
.728
5. Exhibit I-B, policy year, line 28, the medical ratio is
0.766
0.764
.791
6. Add lines (4+5) to get a sum
1.476
1.503
1.519
7. Divide lines (3 / 6) to get the indemnity ratio
35%
35%
38%
8. Subtract lines (6 - 3) to get the medical amount
0.958
0.982
.941
9. Divide lines (8 / 6) to get the medical ratio
65%
65%
62%
 

Notes:

1. For the 7/1/99 and 7/1/00 filings, the split is found in Exhibit II, Law Memo, the bottom two lines.

2. For just policy year 1998 (latest data available as of the 1/1/2001 filing done in September 2000), the split is 63/37. The split is found in Appendix C-1, Indiana Law Memo, the bottom two lines. The gap between the between the medical and indemnity percentages reflects how medical payments and indemnity payments shift over time as a percentage of the total benefits paid.

3. For 1/1/07 & 1/1/08 filings, the split is found in Tech Supp Exhibits I-A & I-B, line 15 avg, 2005 & 2004 years, and Exhibit I-C, line 3; developed to ultimate & projected to midpoint of filing policy year.

4. For 1/1/09, 1/1/10 and 1/1/11, the split is found in Appendix C-I.

5. The 1/1/12, 1/1/13 and 1/1/14 split is shown on Page 5 of the filing cover letter.

 

Additional Resources
Publications that to show the apportionment of WC costs between medical and indemnity:

 
 

Related Files

The material in this document has been prepared and shared for informational purposes only and should not be relied upon as legal advice on any particular situation.