The Underwriting Division is responsible for general classification studies, field audits, inspections and the New Jersey Workers Compensation Insurance Plan.  The Division is also responsible for reviewing individual disability reports to assure proper classification assignment.

During 2006, the number of inspections and the number of audits increased.  There were 71,547 individual pieces of correspondence received dealing with classification, auditing, underwriting and Plan risk matters, representing an increase of 12.8% from the 63,456 received in 2005.  Total correspondence for 2006 included 5,635 pieces resulting directly from employer non-cooperation with Plan Servicing Carriers.

INVESTIGATIONS

The field activity is outlined in the following exhibit. For comparison, the two preceding years are shown.

THE NEW JERSEY WORKERS COMPENSATION INSURANCE PLAN

At the end of the year 2006 there were 63,344 plan risks with an estimated annual premium of $436,450,354, which represents approximately 16.7% of the total New Jersey workers compensation market, compared to 19.1% in 2005.  The Residual Market currently provides coverage to approximately one-third of New Jersey’s insured employers.  There were 16,026 new designations in 2006 representing a 19.6% decrease from the 19,944 employers newly designated in 2005.  There were 21,325 withdrawals in 2006 representing an increase of approximately 12.5% from the 18,957 withdrawals in 2005.  There were 2,508 employers designated to new insurance companies upon notice by the designated company that it wished to be relieved of providing renewal coverage (Paragraph 14 of the Plan), representing a decrease of 53.4% from the 5,382 in 2005.  The Web Application Submission System for Plan risks processed 7,220 new designations, accounting for 45% of new Plan activity compared to 31% in 2005.

The 63,344 Plan risks with an estimated annual Plan premium of $436,450,354 is compared with 68,641 risks with an estimated annual Plan premium of $449,344,300 at the end of 2005.  The result is a decrease of approximately 7.7% in the total number of Plan risks and a decrease of 2.9% in the estimated annual Plan premium.  These results are encouraging and reflect a continuing gradual reduction in overall Plan activity.  This is also reflective of increased Plan depopulation resulting from additional incentives implemented by the Bureau in 2006, including elimination of Premium Discount for Plan risks and expansion of the Plan Premium Adjustment Program.  The following graph shows the development since 1995.

Premium credit of $231,161,312 was in effect December 31, 2006 for 32,645 Plan risks written as regular business compared to $163,098,018 premium for 34,312 risks as of December 31, 2005.  The credit procedure has been in effect since July 1, 1963.

The status of the distribution of Plan Risks as of December 31, 2006 is shown in Table V and the historic exhibit of claim experience under the Plan is shown in Table VI.