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Commissioner Issues Decision on Regulatory Filing

On Friday, September 18, 2015, the California Insurance Commissioner issued a decision regarding the WCIRB’s January 1, 2016 Regulatory Filing which was submitted to the California Department of Insurance (CDI) on June 26, 2015 and subject to a public comment period that ended on September 2, 2015. In the decision, the Commissioner approved all of the WCIRB’s proposed changes to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP), Miscellaneous Regulations for the Recording and Reporting of Data–1995 (Miscellaneous Regulations), and California Workers’ Compensation Experience Rating Plan—1995 (ERP). Some of these changes are effective January 1, 2016 and others are effective January 1, 2017.

Changes Effective in 2016

For January 1, 2016, the Commissioner approved changes to the Standard Classification System to clarify the application of some classifications and to amend minimum and maximum payroll limitations. The Commissioner also approved an amendment to the unit statistical reporting requirements to specify that the cost of independent bill review (IBR) and independent medical review (IMR) will no longer be included as part of the medical cost containment component of allocated loss adjustment expense effective on all IBR and IMR reports paid after January 1, 2016. The cost of IBR and IMR will continue to be included in reported allocated loss adjustment expense.

The Commissioner also approved an amendment to the ERP to use expected loss rates rather than pure premium rates as the basis for experience rating eligibility. This change in the basis of eligibility, while not significantly impacting which employers will be eligible for experience rating, allows the WCIRB to begin issuing January 2016 experience modifications almost immediately—months sooner than previously possible. 

Changes Effective in 2017

For 2017, the Commissioner approved changes to the ERP that allow the WCIRB to issue debit experience modifications, in specified circumstances, excluding the unaudited payroll for policyholders who are uncooperative at the time of a final audit. The Commissioner also approved a significant change to the experience rating formula, replacing the fixed $7,000 primary and excess loss split point with a split point that varies based on the size of the employer. This change enhances the accuracy of the experience rating formula, especially for smaller employers; reduces volatility and provides flexibility for simplifying the experience rating formula in future years. The WCIRB conducted extensive outreach regarding this change prior to the close of the public comment period. A webinar recording of this outreach is available by visiting the WCIRB Webinars page of the website (www.wcirb.com). Additional outreach efforts on this change are planned in the upcoming months.

Availability of Experience Rating Information

The WCIRB will begin calculating January 2016 experience modifications within the next several days. Insurers, agents and brokers may access 2016 experience rating information via WCIRB Connect (connect.wcirb.com) once they are issued.

Updated Manuals for 2016

The WCIRB is in the process of updating the USRP, Miscellaneous Regulations and ERP. Once complete, these documents will be posted to the Publications and Filings page of the website. In the interim, the WCIRB has prepared the New for 2016 and 2017  brochure summarizing the approved changes to the Commissioner’s regulations.

The decision pertains only to the WCIRB’s Regulatory Filing and does not include amendments to advisory pure premium rates. Changes to advisory pure premium rates are proposed in the WCIRB’s January 1, 2016 Pure Premium Rate Filing which was submitted to the CDI on August 19, 2015. The CDI has scheduled a hearing regarding this filing for September 22, 2015.

Related Information

New for 2016 and 2017

WCIRB Submits Regulatory Filing

Regulatory and Pure Premium Rating Filings

Hearing Date Set for January 1, 2016 Pure Premium Rate Filing

 

September 21, 2015