When choosing Workers Compensation as the Line of Coverage, Loss Forecaster provides the added feature of state-specific Loss Development Factors and Benefit Level Change Factors. While leaving the default option of national averages is appropriate for an insured with a nationwide presence, there are multiple scenarios where specifying individual state percentages might be beneficial.
In the simple scenario of an insured that operates entirely in one state, specifying factors for that state will lead to a more consistent analysis. For example, an insured that operates only in Arkansas should choose 100% weighting for Arkansas.
Likewise, an insured that operates in only a few states (5 or less) may benefit from weighting the analysis by those individual states. When choosing the weight to assign each state, the historical losses per state should be the primary consideration. In the event losses per state are not available, payroll by state may work as a supplement assuming consistent loss rates by state.
For an insured with a presence in more than 5 states but not quite nationwide, a hybrid approach may be sufficient. For example, an insured with 30% of losses in Tennessee and another 20% in Georgia, but the remaining 50% scattered across multiple states could weight the factors with a mix of 30% Tennessee, 20% Georgia, and 50% Countrywide.
In the rare case where state mix changes significantly from one year to the next, it may be necessary to complete separate analyses in Loss Forecaster with the appropriate state mix chosen for each individual analysis.