If a business is experience rated, a completed Experience Rating Form (also referred to as an Experience Rating Worksheet) is provided to its insurer when a policy is written. A completed Experience Rating Form provides detailed information about the classification codes assigned to a policy by the WCIRB, the payroll reported for each of those classifications, summaries of claims amounts, and the experience modification. Typically, copies of this form are available by contacting your insurer or insurance professional. A policyholder may obtain a copy of its experience rating form once per year at no cost. (See Experience Rating Worksheet Request for details.) Obtaining an Experience Rating Form is the best way for a company to see the data that the WCIRB has on file.
Click on a number in the image below to read more about that section of the Experience Rating Form.
Please note: The sample data in the form below is intended for demonstration purposes only and should not be deemed as accurate.
The worksheet is divided into the following sections:
- Summary of Payroll and Expected Losses
- Summary of Claims and Actual Losses
- Experience Rating Procedure
This section of the Experience Rating Form contains the information necessary to identify the employer, the insurer and policy, and other infomation pertinent to the application of the experience modification.
Appearing below the company name and address are the classifications (other than 8810, Clerical Office Employees, and 8742, Salespersons-outside) that have been assigned to the company by the WCIRB.
The effective date of the experience modification will normally correspond with the effective date of the policy. If, however, the employer's policies have not incepted on the same day every year or if a correction to an experience modification has been issued, or the operations are covered by more than one policy with different coverage dates, the effective date may differ from the policy inception date.
This is the date that the worksheet was originally released by the WCIRB to the insurance company.
Insurer and Policy Information
The worksheet shows the insurer, insurer group, policy number and issuing office.
Summary of Payroll and Expected Losses
Payroll and loss information on the worksheet is grouped by policy. The insurer code for the insurer who wrote the policy and the policy year is shown above the payroll and claims information for that policy. For information about the insurer codes used by the WCIRB, see WCIRB Insurer Codes.
The classifications listed on the Experience Rating Form represent the operations of the business during the experience period.
The worksheet shows the payroll by classification code, reported for policies beginning within the experience period. Payroll is associated with the year in which your policy began, not necessarily the year in which it was paid. For example, for a policy that is in effect from December 31, 2011 to December 31, 2012, the payroll is reported for 2011, even though most of the payroll is earned in 2012.
Expected Loss Rate
The Expected Loss Rate reflects the anticipated average cost of benefits, per $100 of payroll, for a classification during the experience period. Expected Loss Rates are subject to change yearly. For example, the 2011 Expected Loss Rate for Classification 3632, Machine Shops, is $1.52. In other words, for every $100 of payroll, the average cost of benefits resulting from workplace injuries assigned to Classification 3632 during the experience period was $1.52. The Expected Loss Rates can be found in the Publications and Filings section of the WCIRB website.
Expected Losses are determined by multiplying total payroll (per $100) for each classification by the Expected Loss Rate. This amount reflects an estimate of the cost of losses expected to arise during the experience period for your company based on the payroll reported for each classification.
The Discount Ratio (D-Ratio) is the mechanism used to divide Expected Losses into Primary and Excess amounts. See "Expected Primary Losses" below. The difference between the D-Ratio for each classification reflects differences in the severity of claims by classification. In other words, the severity of the average claim for some classifications is significantly higher (indicating a more severe injury) than that of the average claim found in other classifications. The D-Ratios is subject to change yearly. D-Ratios can be found in the Publications and Filings section of the WCIRB website.
Expected Primary Losses
Expected Primary Losses are determined by multiplying the Expected Losses for a classification by the D-Ratio for the classification. Primary Expected Losses are totaled for all classifications and the difference between the Total Expected Losses and the Primary Expected Losses is the Expected Excess amount.
The Expected Excess is the difference between the total Expected Losses and the total Primary Expected Losses. This number represents average excess losses expected for similar-sized employers within your classification.
Summary of Claims and Actual Losses
This column shows the claim number(s) reported by the insurer. Claims under $2,001 are usually grouped together to save space on the form. If claims are grouped, the number in the Injury Type/# of Claims column will show the number of claims that have been grouped.
Injury Type/# of Claims
This column shows the injury type codes assigned and reported by the insurer. This detail does not affect the experience modification calculation; it is for informational purposes only. Injury type codes are found in Part 4, Section V, B. Loss Data Elements, Rule 3 of the California Workers' Compensation Uniform Statistical Reporting Plan - 1995.
- Permanent Total Disability
- Major Permanent Partial Disability
- Minor Permanent Partial Disability
- Temporary Total or Temporary Partial Disability
- Medical Only Claim
- Contract Medical or Hospital Allowances
- Compromised Death or "S" Claim
This column indicates whether or not the claim was reported as Open or Closed when the claim was last valued. This detail does not affect the calculation. It is for informational purposes only.
Actual Losses shows the total claims value (medical and indemnity) as of the last valuation date. For information about claim valuation dates, see Unit Statistical Reports. Actual Losses are totaled for all claims.
Actual Primary Losses
The first $7,000 of a claim's value is the Actual Primary Loss amount. (Any remaining amount is Excess.) Claims under $2,001 are grouped together to save space on the form. Actual Primary Losses are totaled and this figure is subtracted from the Actual Losses to determine the Actual Excess amount.
Actual Excess Losses
Actual Excess Losses is the difference between the Actual Losses and the Actual Primary Losses. Actual Excess amounts represent the portion of your claims that exceed the Actual Primary Losses.
Experience Period Totals
Various expected and actual loss columns are totaled. These amounts represent the totals for the experience period and will be used in the experience modification calculation.
Experience Rating Procedure
The bottom portion of the worksheet shows the experience rating formula with each of the values necessary to complete the calculation. For multi-page worksheets, the calculation is shown only on the final page.
The weight given to Actual Primary Losses in the experience modification calculation. It is a function of Total Expected Losses and is subject to change yearly. Credibility Primary values can be found in the Publications and Filings section of the WCIRB website.
The weight given to Actual Excess Losses in the experience modification calculation. It is a function of Total Expected Losses and is subject to change yearly. Credibility Excess values can be found in the Publications and Filings section of the WCIRB website.
This is the experience modification that is the product of the experience rating calculation shown on the form. It is effective as of the Effective Date shown at the top of the worksheet.
The Loss-Free Rating is the experience modification that would have been calculated if $0 (zero) actual losses were incurred during the experience period. This hypothetical rating calculation is provided for informational purposes only.