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The Experience Period and the Data Used to Calculate Workers' Compensation Experience Modifications

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The Experience Period and the Data Used to Calculate Workers' Compensation Experience Modifications

September 3, 2014

The WCIRB submitted its January 1, 2015 Pure Premium Rate Filing to the California Department of Insurance on August 19, 2014. Once the Insurance Commissioner issues a decision on the Filing later this year, the WCIRB will begin issuing 2015 experience modifications. What data is used to calculate an experience modification?

Experience Period and Experience Modifications

The data used to calculate an experience modification is determined by the company's anniversary rating date, which in almost all cases is the effective date of the experience modification. The inception date, or start date, of a company's policies determines its anniversary rating date. For example, if the policies always start on January 1, the anniversary rating date would be January 1. If the company changed its policy inception date or has multiple concurrent policies with varying inception dates, determining the anniversary date may be more complicated. In these instances, you should refer to the rules of the California Workers' Compensation Experience Rating Plan—1995  (Experience Rating Plan) or contact the WCIRB Customer Service department.

The anniversary rating date determines the experience period. In most cases, all payroll and losses developed under any policy that incepts within the experience period will be used in determining the experience modification. The experience period is defined in the Experience Rating Plan as the period that commences four years and nine months prior to the anniversary rating date and terminates one year and nine months prior to the anniversary rating date. If the anniversary rating date is January 1, 2015, the experience period is April 1, 2010 to April 1, 2013, as illustrated in the table below.

Some data developed during the experience period is not used in the experience modification calculation. This includes:

  1. Experience of a policy previously used in determining experience modifications that applied to the risk for more than two (2) years and six (6) months.
  2. Experience developed under construction or erection projects lasting more than 180 calendar days outside the United States, its Territories or Canada.
  3. Experience developed under coverage provided to private residence employees.
  4. Experience arising out of workers' compensation insurance written under the laws of any other jurisdiction.
  5. Experience arising out of any class of insurance other than California workers' compensation insurance.
  6. Experience of a policy written by an insolvent insurer with a required month of valuation on or after the date of liquidation of the insolvent insurer, unless the experience previously was used in a rating and no revaluation is required to be filed pursuant to Part 4, Unit Statistical Requirements, Section VI, Rule 1, of the California Workers' Compensation Uniform Statistical Reporting Plan1995.
  7. Unaudited payroll.

To learn more about California's experience rating system, visit the Online Guide to Workers' Compensation or watch one of the WCIRB's Education on Demand video modules. This information is available in the Learning Center of the WCIRB website.

Related Information

2015 Advisory Pure Premium Rate Filing Submitted to CDI
Online Guide to Workers' Compensation: California's Experience Rating System
Education on Demand Video: Experience Rating Eligibility and Qualification