Operations

Operations

Linda M. Hanson, Vice President

Moving the office from 7760 France Avenue South to 7701 France Avenue South was a major event in 1997. It was accomplished the weekend of September 26-28, 1997 with a minimum of downtime for our customers. The negotiation of a new lease in a new location resulted in cost savings, efficiency of a newly constructed building and advantages for Year 2000 compliance. The move also enabled us to upgrade our phone, alarm and security systems, all of which utilize newer technologies. The design and layout of the new space at Centenial Lakes affords MWCIA the flexibility for future and current needs.

A significant aspect of the move was the demise of our filing cabinets. In cooperation with the State of Minnesota, it was determined that the paper files were no longer necessary. We recycled 38 tons of paper. Not having to maintain hardcopy files has resulted in significant savings in floor space usage. Substantial savings in personnel costs to maintain an enormous paper system were also saved.

In June of 1997, new computer programs were instituted to accommodate the expanded unit statistical reporting system. This represented the first change to the unit report since the 1930’s. The new reporting system was developed by the Workers’ Compensation Insurance Organizations’ (WCIO) Advisory Statistical Work Group (ASWG). Minnesota has been an active member since ASWG was formed in 1981 to study the need for statistical reporting both nationally and on a state level.

The unit statistical report was expanded nationally and adopted in Minnesota for reporting on policies effective January 1, 1996 and later. This means that the first unit reports were due in MWCIA offices September of 1997. All insurance companies writing WC insurance in Minnesota adjusted their systems accordingly to comply with the new requirements. By the end of 1997 most carriers were in compliance with the balance or diligently working toward compliance. Credit for the success of this important change is due in large part to the diligence and expertise of our Data Quality staff: Penny Sjoquist, Dorothy Kalinowski and Debbie Peterson.

Another notable event during 1997 was the upgrade of our accounting software into a Windows-based PC product with greater reporting capabilities.

Members of the Operations Supervisory Staff include, left-to-right: Kim LaHoud, Dorothy Kalinowski, Penny Sjoquist, Karen Ose, Henry Treptau and Ora Lowery.

Experience Rating

During 1997, the Association continued its activities in connection with the experience rating of employers. Below is a summary of these activities.

35,046		intrastate experience ratings published, including revisions
20,440		interstate ratings were received and processed
55,486		total ratings published

The 1997 breakdown of ratings by modification factor is as follows:

	Total Ratings less than 0.50	0
	Total Ratings between 0.50 and 0.59	6
	Total Ratings between 0.60 and 0.69	131
	Total Ratings between 0.70 and 0.79	2,502
	Total Ratings between 0.80 and 0.89	9,548
	Total Ratings between 0.90 and 0.99	9,233
	Total Ratings between 1.00 and 1.09	2,415
	Total Ratings between 1.10 and 1.19	2,019
	Total Ratings between 1.20 and 1.29	1,833
	Total Ratings between 1.30 and 1.39	861
	Total Ratings between 1.40 and 1.49	510
	Total Ratings between 1.50 and 1.59	268
	Total Ratings between 1.60 and 1.69	195
	Total Ratings between 1.70 and 1.79	90
	Total Ratings between 1.80 and 1.89	81
	Total Ratings between 1.90 and 1.99	27
	Total Ratings greater than 1.99	75

Merit Rating

Minnesota statutes require that all assigned risks not eligible for experience rating must be subject to a Merit Rating Plan developed by the Department of Commerce. A total of 26,880 assigned risk files were eligible for merit rating in 1997, compared to 32,519 eligible in 1996. The 1997 Merit Ratings were distributed as follows:

25,411
qualified for a Merit Rating of 0.67

501
qualified for a Merit Rating of 0.90

866 qualified for a Merit Rating of 1.00

102 qualified for a Merit Rating of 1.10

Unit Statistical Plan Data

Unit Statistical Plan data is collected, processed and tabulated for use in developing the classification data within the Association’s annual Ratemaking Report. Listed below is a three-year summary of this activity.

Policy
Year Year Tabulated
& Summarized Number of
Unit Reports

1-1-93 to 12-31-93 1995 96,062

1-1-94 to 12-31-94 1996 100,149

1-1-95 to 12-31-95 1997 101,659

Policy Review/Policy Entry

An important activity of the Association is the capture of policy coverage information and the management of the Insurance Coverage Verification System (ICVS). The ICVS function provides the Department of Labor and Industry with computer generated information on workers’ compensation insurance coverage and eliminates the carriers’ obligations to file notifications of coverage and cancellations with the Department. The data entry area processed a total of 610,440 items in 1997, compared to 630,116 in 1996.

Policy Review and Policy Entry items were distributed
as follows:

Voluntary Market

Assigned Risk

Total

Policies
51,845
717 52,562

Policies* (*tape)
17,361
41,499 58,860

Endorsements 211,678 634 212,312

Endorsements* 59,121 177,591 236,712

Cancellations 19,911 302 20,213

Cancellations* 5,527 44,254 49,781

Subtotals 365,443 264,997 630,440

Revenues and Expenses

Commitments and Contingencies

Future lease commitments as of December 31, 1997 are as follows: $376,168 in 1998; $313,173 in 1999; $268,644 in 2000; 218,060 in 2001; and $176,240 in 2002; for a total of $1,352,240. MWCIA Audited financial statements are available at the Association’s offices.

Fines

The Association has a fining procedure for delinquent, incorrect, or incomplete unit reports. This procedure generated $102,400 in fines in 1997. A summary on the status of the fine system is reported to the Commerce Department each month. The current procedure was implemented in 1990.

Insolvent Fund Account

The Association continues to make regular payments to claimants of Security Casualty Company of Chicago. No assessments were levied in 1997.