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A substantial portion of the Unit Statistical Plan incentive charges incurred in 2015 was
attributable to a small number of carriers in various stages of supervision, rehabilitation and/or
liquidation by various Insurance Departments. As a consequence, approximately $913,000 of
the Unit Statistical Plan incentive charges incurred for the year proved uncollectible.

Test Audit Program – The four-quarter difference ratio adjusted for carriers opting out of the
program was 15.2% for 2015, compared to 16.2% for 2014. Both of those difference ratios are
substantially below (better than) the prevailing program standard of 20 percent.

WORKERS COMPENSATION RESEARCH INSTITUTE (WCRI) BENCHMARKING STUDIES

The PCRB continues to provide substantial funding for the inclusion of Pennsylvania in a series
of multi-state studies conducted by the Workers Compensation Research Institute. The 15th
multi-state report, CompScope™ Medical Benchmarks, including the 17 jurisdictions of
Arkansas, California, Florida, Georgia (new state), Illinois, Indiana, Iowa, Louisiana,
Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas,
Virginia and Wisconsin, was published in February of 2015. The 16th multi-state report,
CompScope™ Benchmarks, including the same 17 jurisdictions was released in draft form in
January of 2016 and will be published during this year. As a function of the Benchmarks, the
PCRB continues its participation on the bi-annual WCRI Advisory Council for Pennsylvania.

LEGISLATIVE INITIATIVES

There was no appreciable Pennsylvania legislation impacting the workers’ compensation
system. However, PCRB stands ready to provide objective and credible input to public policy
debates involving the workers’ compensation system. PCRB did focus on work regarding two
nationally focused initiatives having significant bearing on workers’ compensation. These NCCI
filings were: 1) Audit Non-Compliance (endorsement for non-cooperative insureds) and 2)
Elimination of Anniversary Rating Date. Filings for these programs were made in early 2016.

Throughout 2014 and into 2015, the expiration of the Terrorism Risk Insurance Program
Reauthorization Act of 2007 presented concerns and challenges for the PCRB and its members.
Various approaches to informing the public policy debate on this subject were considered by the
PCRB and its Governing Board. Although there were many options regarding a TRIPRA
renewal, such as: unique and/or special features of terrorism risk, unique and/or special
features of workers’ compensation insurance, economic benefits of a federal backstop in lieu of
traditional insurance for workers’ compensation terrorism exposures and timing considerations
pertaining to the expiration of TRIPRA; a reauthorization bill was approved in mid-January,
2015. The PCRB promptly submitted a filing to the PA Department of Insurance, which they
approved on January 29, 2015. The TRIPRA reauthorization changes were retroactive to
January 1, 2015. In 2016, the PCRB is participating in a special data call to the National
Association of Insurance Commissioners (NAIC) and Federal Insurance Office (FIO) regarding a
requirement of the reauthorization to further analyze and study the terrorism exposure in
anticipation of the next renewal cycle.

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