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Closed Claim Ratio Test

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Closed Claim Ratio Test

February 19, 2014

 

The WCIRB often receives inquiries regarding whether an experience modification will be revised when a claim is closed. The Closed Claim rule (California Workers' Compensation Experience Rating Plan–1995 (ERP), Section VI, Rule 12, Closed Claims) provides that an experience modification may be subject to revision whenever claims that were used in calculating the experience modification are reported as closed pursuant to the California Workers' Compensation Uniform Statistical Reporting Plan–1995 (USRP).

If the aggregate value of all closed claims that are required to be used in the experience rating are valued collectively at an amount that is less than 60 percent of the aggregate of the highest value at which each closed claim was previously used in a rating, then the experience rating may be revised using the most current reported values. Experience modifications will not be revised pursuant to the Closed Claim rule if it results in an increase to the experience modification.

When a claim is first reported by an insurer as closed on a unit statistical report, the WCIRB automatically reviews the policyholder's current and two immediately preceding experience modifications to determine if they should be revised pursuant to the Closed Claim rule. As necessary, revised experience modification(s) are automatically published and the insurer is notified.

To Learn More

To review the Insurance Commissioner's regulations regarding requirements for experience modification corrections, see the California Workers' Compensation Experience Rating Plan–1995  in the Manuals and Plans section of the WCIRB website (www.wcirb.com).

Education on Demand: Experience Rating Module 2: Loss Valuation and Reporting