2011 ANNUAL REPORT

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN P.O. Box 3337 • Livonia, MI 48151-3337 • (734) 462-9600 • Fax (734) 462-9721 Internet WEB Site: www.caom.com • E-Mail: [email protected]

AGENDA FOR THE 2012 ANNUAL MEETING SCHEDULED FOR TUESDAY, APRIL 24, 2012 AT 10:00 A.M. IN THE CAOM OFFICE

The Agenda for the Annual Meeting will be as follows:

1. Call to Order, determination of a quorum.

2. Approval of Minutes of the April 26, 2011 Annual Meeting.

3. Chairperson’s remarks.

4. Annual Report overview.

5. Election of Governing Board Members. Current members are:

Accident Fund Insurance Company of America Amerisure Insurance Companies Auto-Owners Insurance Company Citizens Insurance Company of America Frankenmuth Mutual Insurance Company Harleysville Lake States Insurance Company The Hartford Liberty Mutual Insurance Company The Travelers Companies

6. Any additional business to come before the members.

7. Adjournment.

ANNUAL REPORT

FOR THE YEAR 2011

FOR PRESENTATION TO THE MEMBERS

OF THE

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN

Submitted by: Jerry J. Stage President

MISSION STATEMENT

The mission of the Compensation Advisory Organization of Michigan is to enhance the Michigan Workers’ Compensation System through customer service, education and the administration of the Michigan Workers’ Compensation Placement Facility.

The Compensation Advisory Organization of Michigan will perform its duties in an equitable, professional and responsive manner when dealing with all participants in the system.

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The following is our Annual Report for the year ending December 31, 2011 as presented to the Members and Subscribers of the Compensation Advisory Organization of Michigan.

We are pleased to offer this report highlighting the activities and operational results of CAOM for the year 2011.

BOARD OF GOVERNORS

Article X and Article XIII, respectively, of the Bylaws of the Compensation Advisory Organization, provide for the establishment of the Board of Governors and standing committees.

The Board of Governors was elected by the membership of the Compensation Advisory Organization at the Twenty-Ninth Annual Meeting on April 26, 2011. Pursuant to the Bylaws, each governor serves until the next Annual Meeting of the membership. The governors were elected as follows:

Accident Fund Insurance Company of America Amerisure Insurance Companies Auto-Owners Insurance Company Citizens Insurance Company of America Frankenmuth Mutual Insurance Company Harleysville Lake States Insurance Company The Hartford Liberty Mutual Insurance Company The Travelers Companies, Inc.

The Board held two meetings in 2011. Agenda items included: the appointment of officers and committee members, the operational status of CAOM, Status of Competition, the American Cooperative Council on Compensation Technology (ACCCT), Compensation Data Exchange (CDX), the Worker’s Compensation Research Institute’s Compscope™ Report, Federal Coverage, the 2010 Annual Audit of CAOM and the 2012 Annual Budget.

OPERATIONS COMMITTEE

The Chairperson of the Board of Governors appointed the Operations Committee as required by Article XIII of the Bylaws. The following members served on the committee in 2011.

Accident Fund Insurance Company of America Amerisure Insurance Companies Citizens Insurance Company of America

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The Operations Committee met in 2011 to consider CAOM’s 2012 budget and other administrative matters.

DATA COORDINATION COMMITTEE

The companies serving on the Data Coordination Committee were as follows:

Accident Fund Insurance Company of America American Compensation Insurance Company Amerisure Companies Auto-Owners Insurance Company CNA Insurance Company Farm Bureau Mutual Insurance Company of Michigan Liberty Mutual Insurance Company The Travelers Companies, Inc.

The primary function of the Data Coordination Committee is the development and review of the statistical plan and reporting requirements for Michigan. The committee met in July 2011 to discuss the Data Collection Agency’s Pure Premium Publication, the Michigan Workers’ Compensation Placement Facility’s proposed January 1, 2012 Rate Filing, and the Retrospective Evaluation of the Assigned Risk Rating Plans.

CAOM released the annual Data Collection Agency Pure Premium Publication in September. The 2012 pure premium indications reflected an overall decrease of 7.4%.

PUBLIC ACT 266

In December of 2011 Michigan Governor Rick Snyder signed House Bill 5002 into law changing several aspects of Michigan’s workers compensation act. In February 2012 the Data Collection Agency directed CAOM to evaluate Public Act 266 to determine what effect these changes have on pure premiums.

Summary of Important Provisions

 Require injury to be “medically distinguishable” from employee’s prior condition  Definition of “wage earning capacity”  Require the effect of medical treatment to be considered in determination of whether loss of a specific body part occurred  Allow employer to direct medical treatment for 28 days after injury (previously 10 days)  Links interest rate on comp payments to market rate (previously 10%)

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CAOM’S OPERATIONS

In 2011, CAOM continued to serve its membership in numerous capacities. Our data collection responsibilities were enhanced by new methods of data transmission. Several experience rating options were offered to member carriers. CAOM operations were improved through enhancements to its computer system and other computer technology advancements. Internet services were expanded and computer security continues to be enhanced.

In 2011, CAOM continued to make improvements in many of its services to our members. CAOM experienced a reduction in staff of two (2) employees during 2011 mainly due to efficiencies gained by increased use of electronic data exchange along with new computer technologies.

During 2011, CAOM’s IT Department implemented the following initiatives:

 Completed software installation and employee training on new desktop PCs.  Migrated critical business applications such as HR, accounting, etc.  Replaced printers, scanners, and UPS equipment.  Upgraded network switches from 10/100 to gigabit, and verified 10x speed increase.  Conducted security analysis of new OAR website software and related systems.  Conducted Disaster Recovery backup image restores to dissimilar hardware.  Upgraded enterprise security software to latest version.  Installed new backup software on ARFSNET application server and MIFDRA web server.  Migrated server backup media from tape to external portable hard drives with offsite rotation.  Upgraded desktop image backup software to support Windows 7.  Upgraded website development software from FrontPage to Expression Web.  Installed new software to allow network alert messages to reach users faster.

By collecting and processing all policy, statistical and annual financial call data, CAOM continues to fulfill its role as the “Designated Advisory Organization” for workers’ compensation insurance in Michigan. As indicated in CAOM Circular #244, the Michigan Statistical Plan Manual was updated in 2011.

Following a major revision to the Michigan Financial Data Reporting Application (MIFDRA) in 2011, CAOM collected all financial calls in 2011using MIFDRA Version 2. This program allows all member carriers to submit all financial call data via a web based system that provides users the ability to upload, modify, edit, validate, export and submit - 4 - financial data. MIFDRA has proven to be very successful by helping to prevent reporting errors, ensure quality data, enhance timeliness of reporting and provide immediate feedback of failed data quality checks. CAOM receives all financial calls online, then reviews and when necessary contacts carriers for resubmission or further explanation of the financial calls.

In 2011, CAOM once again provided the State of Michigan’s Workers Compensation Agency (WCA) Funds Administration with individual carrier workers’ compensation premiums for their yearly assessments. These assessments are for the Second Injury Fund, The Silicosis, Dust Disease and Logging Industry Compensation Funds. Section 551 of Public Act 317 recognizes CAOM as the source of data for this purpose.

During 2011, CAOM and the Michigan WCA continued to test new carriers for electronic proof of coverage. Data is submitted through CAOM, based on the carrier’s WCPOLS submissions. Qualifying carriers no longer have to submit hard copy forms, Notices of Coverage (Form 400) or Cancellations (Form 401) to the WCA.

CAOM Circular Letter #193 and the Worker’s Compensation Agency web site http://www.michigan.gov/wca/0,1607,7-191-26925-80536-,00.html provide further details on how carriers may utilize this system. We encourage all carriers currently submitting policy data to CAOM in the WCIO’s WCPOLS format to consider electronic proof of coverage here in Michigan.

In 2011, the CAOM Board of Governors authorized CAOM to act on behalf of its members in supplying federal coverage data to the United States Department of Labor through the NCCI. Refer to CAOM Circular Letter #250 for further information.

CAOM’s web site, http://www.caom.com, continues to have increased activity for access to CAOM/Facility data. On-line access to the Data Collection Agency (DCA) pure premiums, CAOM’s circular letters and aggregate financial calls along with Facility rates, forms and manuals increased during 2011. The Facility Classification Manual continues to be especially popular. This manual allows underwriters, agents and others the ability to look-up classification codes based on employer operation descriptions. In early 2011, a new Online Assigned Risk (OAR) application program was introduced. Refer to MWCPF Circular Letter # 239 for further information.

CAOM’s “Members Only” area on our web site contains our annual reports, status of competition reports, assessment information financial audits and full background data supporting the annual DCA Pure Premium Publication. This area is available for viewing by all registered CAOM members. If you wish to register for our “Members Only” section, click on http://www.caom.com/EmailRegistration.htm.

In May 2011, CAOM hosted a very successful and productive meeting of the Workers Compensation Insurance Organizations (WCIO) in Bay Harbor, Michigan. The WCIO is a voluntary association of statutorily authorized or licensed rating, advisory or data service organizations that collect workers’ compensation information in one or more - 5 - states. The WCIO is composed of the leaders of these various organizations.

The WCIO provides a forum for the exchange of information about workers compensation insurance among its members. The WCIO has developed specifications for the electronic submission of information between Insurers and DCOs. These specifications are available for reporting policies, unit statistical reports, experience modification factors, and assigned risk notices of assignments. The specifications are found in the WCIO Data Reporting Specifications Manual. The specifications are available on the Product page of the WCIO web site: www.wcio.org. The Electronic Data Interface Committee (EDI), a subcommittee of the WCIO, is responsible for updating the WCIO Workers’ Compensation Data Specifications Manual.

During 2011, CAOM eliminated paper copy distribution of Unit Statistical Report Criticism letters. Effective January 1, 2011, CAOM uses the WCIO WCCRIT electronic file format to deliver USR crits to all its member carriers via the CDX system. Refer to CAOM Circular Letter #241 for more details.

CAOM is also a member of the American Cooperative Council on Compensation Technology (ACCCT) and the Compensation Data Exchange (CDX), which are consortiums of workers’ compensation rating and advisory organizations. The purpose of ACCCT and CDX is to foster technical cooperation on various projects.

ACCCT has developed several products which are provided to the insurance industry in general and CAOM’s member carriers. Included are:

1. Bureau Entry and Edit Package (BEEP) which allows insurers to data enter or import Unit Statistical Reports (USRs) in the WCIO WCSTAT format for reporting to DCOs. This includes validation and create submission functions.

2. Policy Entry and Edit Package (PEEP) which allows insurers to data enter or import policy transactions in the WCIO WCPOLS format for reporting to DCOs. This also includes validation and create submission functions.

3. Compensation Data Exchange (CDX) is the core product as it contains security and controls for all of the products. Its main function is to transfer files from Insurers to DCOs and from DCOs to Insurers.

4. Experience Modifications Worksheets (EXR) which allows insurers to view, print and download individual employers’ loss history. This information is made available by DCOs for insurers and is based on the WCIO WCRATING format.

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Michigan was included in the Workers Compensation Research Institute’s (WCRI) 12th Edition of WCRI’s CompScope™ study, released in December 2011. This multi state study compares workers compensation system performance for sixteen (16) major states. This report showed that Michigan’s costs per workers compensation claim are substantially lower than the other states included in this study, prompting media reports to state that despite rampant unemployment and rising labor costs, Michigan’s workers’ comp system is a competitive asset for the state and also provides a better value proposition for both employers and injured workers.

For several years now, CAOM has assessed a paper policy processing fee. Carriers submitting printed paper copies of new and renewal policies are charged $25 per policy (refer to CAOM Circular Letter 211). This fee has led to many carriers changing over from paper policy submissions to electronic submission of policy data. In 2011 only 2% of all policies received were paper.

The EXR product allows CAOM to discontinue the printing and mailing of Experience Rating forms. For further information on CDX’s EXR program, visit the ACCCT web site, www.accct.org.

CAOM charges $10 for printed Experience Modification forms. The previous charge of $5.00 per modification remains in effect for carriers who receive their new and renewal modifications electronically via the CDX – Experience Rating Worksheet Look-Up Product (refer to CAOM Circular Letter #187 & Circular Letter #192). More and more carriers are receiving their mod data electronically.

CAOM’s Online Experience Mod System (OEMS) provides online access to experience modifications. Carriers who subscribe to this service are able to look up mods for all eligible experience and merit rated risks. CAOM Circular Letter #181 provides the details of this program.

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These new and improved services have reduced employee time as well as printing and mailing costs while enhancing our ability to circulate information to more of our members in a timely manner.

Under Michigan’s open rating system, CAOM maintains programs to produce experience modifications based on each carrier’s individual set of rating factors. Each carrier files their own experience rating factors with the Michigan Office of Financial and Insurance Regulation (OFIR) and separately notifies CAOM of such changes.

Several options are offered to the membership to produce their experience modifications. These options include payroll and loss data, special request modifications for prospective risks, renewal modifications and experience modifications on electronically transmitted files. CAOM has a mod quote form on its web site, which allows carriers to request experience rating forms for prospective insureds via the Internet. Once received at CAOM, the quotes are emailed back to the carrier. Recently CAOM expanded access to electronic payroll and loss data by agents and employers.

CAOM also distributes renewal experience rating data via electronic transmission. The WCIO’s WCRating file specification is utilized to transmit the entire rating form to the carrier electronically. The CDX EXR program previously described is the preferred method for carriers to electronically receive their rating forms. In 2011, additional carriers subscribed to CAOM’s web based mod look up service. Total experience rating production fees assessed for all mod services during 2011 amounted to $512,915, which is significantly less than the prior two (2) years.

The number of risks qualifying for experience or merit rating declined by 1% in 2011. The three years of experience normally going into a 2011 rating are 2007, 2008 and 2009. The minimum annual premium necessary for merit rating is $1,000 and for experience rating $5,000.

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The following graph illustrates the number of risks qualifying for experience rating by calendar year for the past five years:

Year Total Ratings Merit Experience

2007 91,178 48,839 42,339 2008 88,497 47,874 40,623 2009 86,678 47,327 39,351 2010 83,512 46,447 37,065 2011 82,286 46,443 35,843

Modification Production

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The breakdown of Regular Experience Rating Modification (over $5,000 in premium) is as follows:

2011 EXPERIENCE MODIFICATIONS DISTRIBUTION

VOLUNTARY MOD RANGE FACILITY TOTAL MARKET

.01 - .54 0 24 24 .55 - .64 0 74 74 .65 - .74 1 388 389 .75 - .84 32 3906 3938 .85 - .94 482 17,745 18,227 .95 - 1.04 421 7,123 7,544 1.05 - 1.14 49 1,358 1,407 1.15 - 1.24 112 1,662 1,774 1.25 - 1.34 80 905 985 1.35 - 1.44 59 605 664 1.45 - 1.54 47 362 409 1.55 - 1.64 25 165 190 1.65 - 1.74 13 72 85 1.75 - 1.84 12 38 50 1.85 - 1.94 13 20 33 1.95 - 2.04 7 10 17 2.05 - 2.14 4 8 12 2.15 - 2.24 1 5 6 2.25 - 2.99 4 10 14 3.00 - 3.99 0 1 1 4.00 - 4.99 0 0 0 5.00 - 0 0 0 TOTAL 1,362 34,481 35,843

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2011 EXPERIENCE MODIFICATION DISTRIBUTION

VOLUNTARY MOD RANGE FACILITY TOTAL MARKET HIGHEST MOD 2.83 3.29 3.29 LOWEST MOD 0.74 0.44 0.44 AVERAGE 1.07 0.96 0.96 MEDIAN 0.96 0.93 0.93 CREDITS 60.5% 77.4% 76.8% UNITY 7.3% 6.1% 6.2% DEBITS 32.2% 16.5% 17.1%

2011 MERIT MODIFICATION DISTRIBUTION

Merit Mod # Risks in # Risks in Total Range Facility Voluntary Market

0.95 2,363 41,221 43,584 1.00 232 2,368 2,600 1.05 54 205 259 Total 2,649 43,794 46,443 CREDITS 89.2% 94.1% 93.8% UNITY 8.8% 5.4% 5.6% DEBITS 2.0% .5% .6%

.95 = No lost time claims 1.00 = One lost time claim 1.05 = Two or more lost time claims

In accordance with the Michigan Workers’ Compensation Statistical Plan, CAOM - 11 - receives a unit statistical report for each policy issued. Timely submission of unit statistical data by carriers is needed in order for CAOM to issue experience and merit modifications in advance of the policy renewal date. Ninety-six percent (96%) of all ratings were promulgated at least two months in advance of their policy renewal date.

The percentage of experience modifications issued at least ninety days (90) in advance of the policy renewal date also rose 1% in 2011. In 2011, CAOM promulgated 95% of all ratings at least three months in advance of their renewal dates. Most renewal experience ratings are run automatically once a month for those risks which pass qualifying edits.

CAOM has a system of fining carriers for delinquent unit statistical reports. Unit reports overdue by 60-90 days result in a $50 fine and reports overdue by more than three months are fined $100. Beginning in 2011, carriers were also fined for late submission of corrected statistical reports resulting from the new electronic criticisms, 56 carriers were fined a total of $96,800 for late submission of corrected statistical reports in 2011. During 2011, only two (2) carriers were fined for a total of $2,300 for delinquent unit reports. The total number of unit statistical reports received at least 60 days late was 933. This was a 21% increase from 2010.

OVERDUE UNIT STATISTICAL REPORT FINES

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CAOM also has a fine system for delinquent financial calls. The Policy Year, Calendar Accident Year and Large Loss calls and Reconciliation report are due into CAOM on April 1st. The Countrywide Loss Adjustment Expense call is due in on May 1st. The following graph shows the number of carriers fined for late submissions and the amount collected by CAOM

FINANCIAL CALL FINES

Every other month, CAOM issues a report to each carrier identifying overdue unit statistical reports (USRs). The following graph illustrates the number of overdue stat reports during the past five years. The count for 2011 includes all USRs whereas prior years only included experience/merit rated risks.

Delinquent Unit Reports

2500

2000 1906

1500 1224 954 933 1000 771

500 2007 2008 2009 2010 2011

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CAOM receives requests for rating data from carriers, insureds, agents and other authorized representatives. The following graph is a synopsis of requests received in 2011 compared to prior years.

EXPERIENCE RATING DATA REQUESTS

New Letters of Mod Payroll & Total Year Carrier Authority Quotes Losses Requests

2007 5,198 1,881 42,992 838 50,909 2008 2,910 1,730 45,611 553 50,804 2009 2,050 1,848 42,024 387 46,309 2010 1,628 1,678 37,392 666 41,364 2011 952 1,587 32,540 303 35,382

As required by the Michigan’s Workers’ Compensation Statistical Plan, the Compensation Advisory Organization of Michigan receives a copy of all voluntary market policies and unit statistical reports. The proper handling of this data is very important to CAOM’s ability to issue experience modifications and supply statistical data to its member carriers, committees, state regulators and other concerned parties.

In 2011, 98% of all policies and endorsements were submitted electronically. Pertinent items received by the Compensation Advisory Organization of Michigan during the 2011 year and the prior four (4) years are identified by the following chart.

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Voluntary Placement Total Year Market Policies Facility Policies Policies Received

2007 169,885 18,762 188,647 2008 174,213 17,624 191,837 2009 168,486 15,368 183,854 2010 169,352 14,707 184,059 2011 171,078 14,139 185,217

Voluntary Placement Total Market Facility Endorsements Year Endorsements Endorsements Received

2007 140,113 12,210 152,323 2008 176,992 13,222 190,214 2009 156,516 11,090 167,606 2010 160,078 10,402 170,480 2011 162,184 16,095 178,279

NOTE: 2008 showed an unusually large amount of endorsements due to the extension of the Federal Terrorism Acts in late 2007.

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The following figures represent unit statistical reports processed by CAOM during the last five years for both the Facility and the voluntary market.

UNIT YEAR STATS 2007 222,404 2008 216,971 2009 222,301 2010 210,997 2011 203,473

The WCIO Workers’ Compensation Data Specifications Manual contains specifications by which carriers can submit policies and unit statistical reports electronically to each rating organization. This manual is available on the WCIO web site, www.wcio.org. Michigan follows the same specifications used by the National Council on Compensation Insurance and the other independent states. CAOM receives policy and statistical data via several electronic file transfer methods including ACCCT’s Compensation Data Exchange (CDX). The use of electronic transmission of data has proven to be a very efficient and highly accurate means of transferring data. We urge all member carriers to consider utilizing these forms of data submission for both unit statistical reports and policy information.

In 2011, CAOM, in its capacity as the “Designated Advisory Organization,” submitted extensive documentation to the Michigan Office of Financial and Insurance Regulation (OFIR) to assist the commissioner in monitoring the status of competition in the workers’ compensation insurance market. These reports can be found on our web site in the member’s only section.

PERSONNEL

In 2011, CAOM undertook revisions in the areas of job responsibilities, procedures and employee benefits. The employee benefit package was reviewed. Following this review, certain insurance coverage was altered to ensure that the benefit package being offered to employees was at a justifiable cost.

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STAFFING

CAOM started 2011 with a staff of thirty-four (34) employees, by year’s end the staffing level was reduced to thirty-two (32) due to vacated positions that were not replaced.

2005 2006 2007 2008 2009 2010 2011 Customer Services 7*** 7*** 7 6 6 5 5*** Data Services 9 9 8 9 8 7 7 Policy Services 10* 10* 10 9 8 8 * 8 * Rating Services 7** 7** 7** 7** 7** 7** 5 Managers 4 4 4 4 4 4 4 Executives 3 3 3 3 3 3 3 40 39 40 37 35 34 32

CAOM is currently operating with 30 full-time employees and 2 part-time employees.

* CAOM employs one permanent part-time employee in the Policy Services Department. ** CAOM employed one permanent part-time employee in the Rating Services Department. *** CAOM employs one permanent part-time employee as Assistant to President in Customer Service Department.

CROSS TRAINING

CAOM has always emphasized cross training of employees to enhance operational efficiency through the best usage of all employees. As job requirements change, employees undertake additional or new job functions with little disruption to the performance of the organization.

OUTSIDE TRAINING

As in past years, CAOM continued to utilize outside sources in 2011 to supplement the training and development of the professional and management staff.

YEARS OF SERVICE

The Compensation Advisory Organization maintained an experienced staff during 2011. Average service as of December 31, 2011 is 28.8 years.

YEARS OF SERVICE NUMBER OF EMPLOYEES 1 year or Less 0 2 to 4 years 1 5 to 9 years 0 10 to 14 years 2 15 to 19 years 0 20 to 24 years 6 25 to 29 years 5 30 + years 18

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FINANCES

The financial records of the Compensation Advisory Organization of Michigan will be audited by an independent public accounting firm. Copies of the financial statements for 2011 prepared by the auditing firm will be made available in the “Members Only” area of our web site.

MICHIGAN OPERATING EXPENSE RATIO

CAOM/Facility Expense Year Total Premium Expense Ratio 2002 1,261,231,919 3,718,400 .295% 2003 1,235,923,038 4,381,904 .355% 2004 1,325,638,116 4,792,772 .362% 2005 1,154,259,761 5,605,420 .486% 2006 1,160,165,082 5,775,964 .498% 2007 1,147,792,457 6,269,323 .546% 2008 989,787,622 6,478,436 .655% 2009 913,173,857 5,322,842 .583% 2010 945,950,998 4,922,230 .520% 2011 948,041,161# 4,642,746 .490%

# Based on Estimated Total Premium as of 3/1/12

CIRCULAR LETTERS

The Compensation Advisory Organization of Michigan published eight (8) circulars in 2011 dealing with the pure premium publication, financial calls, statistical plan changes, ACCCT, WCA-EDI, experience rating promulgations, as well as miscellaneous information of general interest to our members. A complete Circular Letter Index is attached to this report. CAOM and Facility circular letters are available for viewing on our web site www.caom.com.

MEMBERS

Attached to this report is an exhibit displaying a complete list of Members of the Compensation Advisory Organization of Michigan as of December 31, 2011. At year’s end, there were 363 companies affiliated with the Compensation Advisory Organization of Michigan.

This report reflects the operation of the Compensation Advisory Organization of Michigan for the 2011 calendar year. We would like to thank the Board of Governors of the Compensation Advisory Organization of Michigan for their direction, the Data Coordination Committee for their technical assistance and all other organizations that provided assistance, cooperation and technical support throughout the year.

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I again thank CAOM’s entire membership for their continued support. I especially thank all of our employees, and those individuals who served as company or employer representatives on CAOM committees, for their guidance and assistance throughout the year. I also wish to express my gratitude to the Commissioner of Financial and Insurance Regulation, the Michigan Economic Development Corporation, the (Michigan) Workers Compensation Agency, the Department of Labor and Economic Growth and all other organizations that provided assistance during the course of the year. I look forward to continuing our progress in building and maintaining the country’s best worker’s compensation system.

Very truly yours,

Jerry J. Stage President

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COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN 2011 Circular Letter List

Circular Number Date Circular Letter

242 2/1/11 2011 Financial Calls for the State of Michigan

243 3/25/11 Notice of Annual Meeting with Proxy

244 4/14/11 MI Statistical Plan Manual Changes

245 7/1/11 EDI Claims Announcement

246 7/1/11 Reapportionment 2010

247 8/1/11 ACCCT the future Survey

248 9/2/11 Pure Premium Publication (2012)

249 10/3/11 2012 Experience Ratings

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

21ST Century Security Insurance Company Accident Fund General Insurance Company Accident Fund Insurance Company of America Accident Fund National Insurance Company Ace American Insurance Company Ace Fire Underwriters Insurance Company Ace Property & Casualty Insurance Company ACIG Insurance Company Acuity, A Mutual Insurance Company Advantage Workers Compensation Insurance Company AIU Insurance Company All America Insurance Company Allianz Global Risks US Insurance Company Allied Eastern Indemnity Company Allied Property & Casualty Insurance Company Allied World Reinsurance Company Allmerica Financial Benefit Insurance Company AMCO Insurance Company American Alternative Insurance Corporation American Automobile Insurance Company American Business & Personal Insurance Mutual American Casualty Company of Reading, PA American Compensation Insurance Company American Country Insurance Company American Economy Insurance Company American European Insurance Company American Fire and Casualty Company American Fuji Fire & Marine Insurance Company American Guarantee and Liability Insurance Company American Home Assurance Company American Insurance Company American Interstate Insurance Company American Mining Insurance Company American Physicians Assurance Corporation American Safety Casualty Insurance Company American Select Insurance Company American States Insurance Company American Zurich Insurance Company Amerisure Insurance Company Amerisure Mutual Insurance Company Amerisure Partners Insurance Company Ameritrust Insurance Corporation Amguard Insurance Company Amtrust Insurance Company of Kansas Ansur America Insurance Company Arch Insurance Company Argonaut Great Central Insurance Company Argonaut Insurance Company Argonaut Midwest Insurance Company Arrowood Indemnity Company

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Associated Indemnity Corporation Assurance Company of America Athena Assurance Company Atlantic Specialty Insurance Company Auto-Owners Insurance Company Automobile Insurance Company of Hartford CT Axis Insurance Company

BancInsure Inc. Bankers Standard Insurance Company Benchmark Insurance Company Berkley National Insurance Company Berkley Regional Insurance Company Berkshire Hathaway Homestate Insurance Company Bituminous Casualty Corporation Bituminous Fire and Marine Insurance Company Bloomington Compensation Insurance Company Brotherhood Mutual Insurance Company

Camden Fire Insurance Association Capitol Indemnity Corporation Carolina Casualty Insurance Company CastlePoint National Insurance Company Central Mutual Insurance Company Century Indemnity Company Charter Oak Fire Insurance Company Chartis Property Casualty Company Cherokee Insurance Company Chubb Indemnity Insurance Company Church Mutual Insurance Company Cincinnati Casualty Company Cincinnati Indemnity Company Cincinnati Insurance Company Citizens Insurance Company of America Citizens Insurance Company of Ohio Citizens Insurance Company of the Midwest Clarendon National Insurance Company Colonial American Casualty & Surety Company Commerce and Industry Insurance Company Companion Commercial Insurance Company Companion Property & Casualty Insurance Company Consolidated Insurance Company Continental Casualty Company Continental Indemnity Company Continental Insurance Company Continental Western Insurance Company Corepointe Insurance Company Crum and Forster Indemnity Company

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Dakota Truck Underwriters Dallas National Insurance Company Depositors Insurance Company Diamond State Insurance Company Discover Property & Casualty Insurance Company

Eastern Advantage Assurance Company Eastern Alliance Insurance Company Eastguard Insurance Company Electric Insurance Company EMCASCO Insurance Company Employers Fire Insurance Company Employers Insurance Company of Wausau Employers Mutual Casualty Company Everest National Insurance Company

Fairfield Insurance Company Fairmont Insurance Company Fairmont Premier Insurance Company Fairmont Specialty Insurance Company Farm Bureau General Insurance Company of Michigan Farm Bureau Mutual Insurance Company of Michigan Farmers Insurance Exchange Farmington Casualty Company Farmland Mutual Insurance Company FCCI Insurance Company Federal Insurance Company Federated Mutual Insurance Company Federated Rural Electric Insurance Exchange Federated Service Insurance Company Fidelity and Deposit Company of Maryland Fidelity and Guaranty Insurance Company Fidelity and Guaranty Insurance Underwriters Fireman’s Fund Insurance Company First Liberty Insurance Corporation First National Insurance Company of America Florists Mutual Insurance Company Frank Winston Crum Insurance Inc. Frankenmuth Mutual Insurance Company Freedom Specialty Insurance Company Fremont Insurance Company

Gateway Insurance Company General Casualty Company of Wisconsin General Insurance Company of America Genesis Insurance Company Grange Insurance Company of Michigan Granite State Insurance Company Great American Alliance Insurance Company Great American Assurance Company

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Great American Insurance Company Great American Insurance Company of NY Great American Security Insurance Company Great Divide Insurance Company Great Midwest Insurance Company Great Northern Insurance Company Great West Casualty Company Greater New York Mutual Insurance Company Greenwich Insurance Company Guideone Mutual Insurance Company

Hamilton Mutual Insurance Company Hanover Insurance Company Harco National Insurance Company Harleysville Insurance Company Harleysville Lake States Insurance Company Harleysville Mutual Insurance Company Harleysville Preferred Insurance Company Harleysville Worcester Insurance Company Hartford Accident and Indemnity Company Hartford Casualty Insurance Company Hartford Fire Insurance Company Hartford Insurance Company of the Midwest Hartford Underwriters Insurance Company Hastings Mutual Insurance Company HDI Gerling America Insurance Company Highmark Casualty Insurance Company Home-Owners Insurance Company

Illinois National Insurance Company Imperium Insurance Company Indemnity Insurance Company of North America Indiana Insurance Company Indiana Lumbermens Mutual Insurance Company Insurance Company of Greater New York Insurance Company of Illinois Insurance Company of North America Insurance Company of the State of Pennsylvania Insurance Company of the West

Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Liberty Mutual Insurance Company LM Insurance Corporation Lumbermen’s Underwriting Alliance

Manufacturers Alliance Insurance Company Manufacturing Technology Mutual Insurance Company Markel Insurance Company Maryland Casualty Company

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Massachusetts Bay Insurance Company MEMIC Indemnity Company Merchants Mutual Insurance Company Merchants Preferred Insurance Company Meridian Security Insurance Company MHA Insurance Company Michigan Commercial Insurance Mutual Michigan Insurance Company Michigan Millers Mutual Insurance Company Mid-Century Insurance Company Middlesex Insurance Company Midwest Employers Casualty Company Milwaukee Casualty Insurance Company Mitsui Sumitomo Insurance Company of America Mitsui Sumitomo Insurance USA, Inc. Monroe Guaranty Insurance Company Motorists Commercial Mutual Insurance Company Motorists Mutual Insurance Company Munich Reinsurance America, Inc.

National American Insurance Company National Casualty Company National Fire Insurance Company of Hartford National Indemnity Company National Interstate Insurance Company National Interstate Insurance Company of Hawaii, Inc. National Liability and Fire Insurance Company National Surety Corporation National Trust Insurance Company National Union Fire Insurance Company of Pittsburgh Nationwide Agribusiness Insurance Company Nationwide Mutual Fire Insurance Company Nationwide Mutual Insurance Company Nationwide Property and Casualty Insurance Company Netherlands Insurance Company New Hampshire Insurance Company New York Marine & General Insurance Company NGM Insurance Company Nipponkoa Insurance Company Norguard Insurance Company North American Elite Insurance Company North American Specialty Insurance Company North Pointe Insurance Company North River Insurance Company Northern Assurance Company of America Northern Insurance Company of New York Nova Casualty Company

Ohio Casualty Insurance Company Ohio Farmers Insurance Company

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Ohio Security Insurance Company Old Republic General Insurance Corporation Old Republic Insurance Company OneBeacon America Insurance Company OneBeacon Insurance Company

Pacific Employers Insurance Company Pacific Indemnity Company Partners Mutual Insurance Company Patriot General Insurance Company Peerless Indemnity Insurance Company Peerless Insurance Company Penn America Insurance Company Penn Millers Insurance Company Pennsylvania General Insurance Company Pennsylvania Lumbermens Mutual Insurance Company Pennsylvania Manufacturers Association Insurance Company Pennsylvania Manufacturers Indemnity Company Pennsylvania National Mutual Casualty Insurance Company Petroleum Casualty Company Pharmacists Mutual Insurance Company Phoenix Insurance Company Pioneer State Mutual Insurance Company Platte River Insurance Company Plaza Insurance Company Praetorian Insurance Company Preferred Professional Insurance Company Preserver Insurance Company Property and Casualty Insurance Company of Hartford Protective Insurance Company PXRE Corporation

QBE Insurance Corporation

Regent Insurance Company Republic Franklin Insurance Company Republic Indemnity Company of America Repwest Insurance Company Retailers Mutual Insurance Company RLI Insurance Company Rockwood Casualty Insurance Company

Safeco Insurance Company of America Safety First Insurance Company Safety National Casualty Corporation Samsung Fire & Marine Insurance Company Seabright Insurance Company Seaton Insurance Company Secura Insurance, A Mutual Company Security National Insurance Company

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Select Insurance Company Selective Insurance Company of South Carolina Selective Insurance Company of the Southeast Selective Way Insurance Company Seneca Insurance Company Inc. Sentinel Insurance Company Ltd. Sentry Casualty Company Sentry Insurance, A Mutual Company Sentry Select Insurance Company Sequoia Insurance Company SFM Mutual Insurance Company Sompo Japan Fire & Marine Insurance Company of America Sompo Japan Insurance Company of America Southern Insurance Company Sparta Insurance Company St. Paul Fire and Marine Insurance Company St. Paul Guardian Insurance Company St. Paul Medical Liability Insurance Company St. Paul Mercury Insurance Company St. Paul Protective Insurance Company Standard Fire Insurance Company Star Insurance Company Starnet Insurance Company Starr Indemnity & Liability Company State Auto Property and Casualty Insurance Company State Automobile Mutual Insurance Company State Farm Fire and Casualty Company State National Insurance Company, Inc. Strathmore Insurance Company

T.H.E. Insurance Company Technology Insurance Company TIG Insurance Company TNUS Insurance Company Tokio Marine and Nichido Fire Insurance Company Ltd. Tower Insurance Company of New York Trans Pacific Insurance Company Transguard Insurance Company of America Transportation Insurance Company Travelers Casualty and Surety Company Travelers Casualty and Surety Company of America Travelers Casualty Company of Connecticut Travelers Casualty Insurance Company of America Travelers Commercial Casualty Company Travelers Commercial Insurance Company Travelers Indemnity Company Travelers Indemnity Company of America Travelers Indemnity Company of Connecticut Travelers Insurance Company Travelers Property Casualty Company of America

COMPENSATION ADVISORY ORGANIZATION OF MICHIGAN Membership as of December 31, 2011

Tri-State Insurance Company of Minnesota Truck Insurance Exchange Trumbull Insurance Company Twin City Fire Insurance Company

U.S. Specialty Insurance Company Ullico Casualty Company United National Casualty Insurance Company United National Specialty Insurance Company United States Fidelity and Guaranty Company United Wisconsin Insurance Company US Fire Insurance Company Utica Mutual Insurance Company

Valley Forge Insurance Company Vanliner Insurance Company Vigilant Insurance Company Virginia Surety Company, Inc.

Wausau Business Insurance Company Wausau Underwriters Insurance Company West American Insurance Company West Bend Mutual Insurance Company Westfield Insurance Company Westfield National Insurance Company Westport Insurance Corporation Williamsburg National Insurance Company Work First Casualty Company

XL Insurance America, Inc. XL Specialty Insurance Company

Zenith Insurance Company Zurich Direct Underwriters Zurich-American Insurance Company Zurich-American Insurance Company of Illinois