Decimal Extension for Loss Costs and Rates are on the Horizon

Over the past year the EDI (Electronic Data Interchange) & WCIO (Workers Compensation Insurance Organization) have discussed a potential change on how loss costs, rates, and expected rates are filed with the DCO's (Data Collection Organizations). Specifically, the main change will be an extension of the decimal to three positions.

To date, this extension of the decimal to three positions has officially been approved by the following DCOs; New York Compensation Insurance Rating Board (NYCIRB), New Jersey Compensation Rating and Inspection Bureau (NJCRIB), and Minnesota Workers' Compensation Insurers Association (MWCIA). In addition, several other DCO's and the NCCI have proposed the extension of the decimal to three positions, with approval pending.

In the interim, the following provides an overview of key points regarding this matter and how Verisk can help you prepare going forward.

Decimal Extension - Background/Impact

As the demand for more granular data continues within the workers' compensation industry, data reporters, from the author's experience, will likely find that the decimal extension will aid DCOs in providing further validity in pricing.

On this point, for example, NYCIRB states that "the purpose of transitioning from loss costs and ELR [Expected Loss Rate] with two decimal places to those with three decimal places is to provide additional pricing accuracy and stability, particularly for classification codes with low loss cost values."^[1] Furthermore, NJCRIB notes that "nationally, and in New Jersey, there has been a notable increase in the exposure base, paired with a decline in rates. As the trend of lower workers compensation rates continues, the year-to-year changes for specific classification codes are constrained when limited to decimal places. Transitioning to three decimal places would allow for greater responsiveness in these adjustments."^[2]

Finally, MWCIA states that "[t]he workers compensation industry has seen a rise in the payroll exposure base and a decline in rating levels. The impact on these trends results in some class codes being mathematically constrained by the two decimal point precision. The expansion of decimal places will allow MWCIA to be more responsive and precise in the setting of all pure premium base rates."^[3]

DCO's that have approved extending the decimal to three positions

As noted above, currently the following three DCOs have approved the transition to three decimal places: New York (implementation date: 10/1/2025),^[4]Minnesota (implementation date: 1/1/2026),^[5]and New Jersey (implementation date: 1/1/2026).^[6]

DCO's that have proposed extending the decimal to three positions (pending approval)

The following DCO's have proposed the transition to three decimal places: Delaware (proposed implementation date: 12/1/2026)^[7]; Michigan (proposed implementation date 1/1/2026)^[8]; and Pennsylvania (implementation date: 4/1/2026).^[9] In addition, NCCI is proposing an implementation date of 1/1/2026.^[10]

The author is also monitoring the remaining DCO's, California, North Carolina, and Wisconsin, for any published information regarding the extension of three decimal places. To date, these DCO's have not published any bulletins or circulars regarding this potential update.

Time to get ready - Verisk's wcPrism can help!

Overall, the forthcoming expansion of the decimal places, should allow the industry to focus on further stability when it comes to pricing. At the same time, this transition will require carriers and vendors to make the required updates internally to ensure the three-digit decimal position is captured and reported accurately.

Now is the time for insurers to start making the applicable preparations to comply with this latest requirement. The good news is that Verisk can help! For those of you who are currently reporting via wcPrism, Verisk is already prepared and ready to report your data with the enhanced requirements! If you are not currently reporting through wcPrism, we would certainly look forward to setting up a call to discuss our solution and help you with all your state workers' compensation reporting!

Please contact me at [email protected] or 732.887.7556 for questions or to set up a call to discuss how Verisk can help you address these forthcoming changes.

[1] NYCIRB Circular R.C. 2597 "Transition to Three Decimal Places for Loss Cost Values and Expected Loss Rates Effective Date: October 1, 2025."

[2] NJCRIB Circular Letter #2068 "Decimal Extension of Rates and Excess Elements."

[3] MWCIA Circular Letter No. 24-1836 "Decimal Extension of Pure Premium Base Rates & Expected Loss Rates."

[4] NYCIRB Circular R.C. 2597 "Transition to Three Decimal Places for Loss Cost Values and Expected Loss Rates Effective Date: October 1, 2025."

[5] MWCIA Circular Letter No. 24-1836 "Decimal Extension of Pure Premium Base Rates & Expected Loss Rates."

[6] NJCRIB Circular Letter #2068 "Decimal Extension of Rates and Excess Elements."

[7] DCRB Circular No. 1035 "Change to Three Decimals For Loss Costs And Expected Loss Rates."

[8] CAOM Circular Letter 343 "Notification of An Extension Of The Decimal Places In Voluntary Market Advisory Rating Values.

[9] PCRB Circular No. 1806 "Change To Three Decimals For Loss Costs And Expected Loss Rates."

[10] NCCI Circular FYI-CW-2024-01 "Countrywide-Decimal Extension of Loss Costs, Rates, and Expected Loss Rates."

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