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Reminder: Changes to the Experience Rating Plan Effective 2015 May Limit the Impact of a Single Claim in the Experience Period

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Reminder: Changes to the Experience Rating Plan Effective 2015 May Limit the Impact of a Single Claim in the Experience Period

November 12, 2014
In this edition: Learn more about the change to the Experience Rating Plan effective January 1, 2015.
 
In October 2013, the California Insurance Commissioner approved a change to the California Workers' Compensation Experience Rating Plan—1995 (Experience Rating Plan) that limits the impact of a single claim on an employer's experience modification if the employer was otherwise loss free during the experience period. This change becomes effective on January 1, 2015.
 
Under this new rule, the experience modification of an employer with only one claim in its experience period will be limited to no more than 25 percentage points above the Loss Free Rating, which is the experience modification that would have been published if the employer had been loss free during the same experience period. This rule applies to all experience modifications calculated by the WCIRB with respect to new and renewal policies as of the first anniversary rating date of a risk on or after January 1, 2015. The employer does not have to be claim free on January 1, 2015 to be eligible.
 
The 25 point limitation does not apply if an employer incurs more than one claim during the experience period or if the employer's experience modification is computed excluding unaudited payroll pursuant to Section III, Rule 3(g) of the Experience Rating Plan.
 
The Experience Rating Form will include an "L" next to the experience modification to identify it as a "limited" experience modification. For reference, the Experience Rating Form will also contain the experience modification that would have been effective if the limitation had not been applied (Calculated Unlimited Experience Modification) as well as the Loss Free Rating.
 
 
Insurers, agents and brokers, and policyholders will see the impact of this rule change on experience ratings effective on and after January 1, 2015 which the WCIRB will begin issuing once the Insurance Commissioner issues a Decision on the January 1, 2015 Pure Premium Rate Filing. The Decision, filing and all related documents will be available at www.wcirb.com under Publications and Filings > Regulatory Filings.

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