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 rating period. This change becomes effective on January 1, 2015.
The new rule provides that for an employer with only a single claim during the experience period, the experience modification is limited to no more than 25 percentage points above the experience modification that would have been published if the employer had been loss free during the same experience period. If an employer incurs more than one claim during the experience period, the employer's experience modification is not subject to the 25 percentage point limit. An experience modification computed excluding unaudited payroll pursuant to Section III, Rule 3(g) of the Experience Rating Plan is not subject to this limit.
To denote that an experience modification is limited, 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.
See a sample Experience Rating Form with a limited experience modification.
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 Rate Filing will be submitted in mid-August and the Insurance Commissioner's Decision will follow within 30 days of the conclusion of the hearing.