Pure Premium Ratemaking
The WCIRB develops advisory pure premium rates for workers' compensation insurance, and the Insurance Commissioner's rules and regulations with respect to the California Workers' Compensation Experience Rating Plan - 1995 (Experience Rating Plan), Miscellaneous Regulations for the Recording and Reporting of Data–1995 (Miscellaneous Regulations) and California Workers' Compensation Uniform Statistical Reporting Plan - 1995 (Uniform Statistical Reporting Plan). The advisory pure premium rates and the Plans are subject to the approval of the Insurance Commissioner. In conjunction with the ratemaking activities, the WCIRB collects premium, payroll and loss information incurred on all workers' compensation policies that provide California coverage. WCIRB members submit policy data to the WCIRB in accordance with the Uniform Statistical Reporting Plan. The information collected is analyzed and made available, in aggregate, to appropriate WCIRB committees and others. In addition, all such information is available in its "raw" form to the Insurance Commissioner or his or her representatives.
Administration of the Insurance Commissioner's Workers' Compensation Regulations
Once the Insurance Commissioner has approved pure premium rates, insurers may choose to use those rates or develop their own rates. Since insurer rates are not uniform or subject to Insurance Commissioner approval, the WCIRB does not review the rates used on policies. Policies are reviewed to facilitate the timely and accurate reporting of data, administration of the Experience Rating Plan and use of approved coverage forms. In addition, unit statistical reports, which contain payroll, losses and final premium for each policy issued, are reviewed for compliance with the Insurance Commissioner's regulations. The WCIRB audits employers' records on a selected basis to ensure that payroll, losses and classifications are reported by insurers in accordance with the Insurance Commissioner's regulations.
Rating Data and WCIRB's Commitment to Data Quality
The WCIRB collects premium, payroll and loss information from all workers' compensation policies that provide California coverage and collects aggregate financial data from each member insurer. This data is used for ratemaking, administration of the Insurance Commissioner's workers' compensation regulations and actuarial research. Portions of the data are provided to the California Department of Insurance to facilitate its solvency monitoring and regulatory activities.
The WCIRB administers a number of programs designed to ensure the quality of the data that is reported by insurers. Included among these programs are the WCIRB California Premium Audit Accuracy Program, WCIRB Unit Statistical Data Quality Program, Submission of California Aggregate Data (SCAD) and the WCIRB Large Risk Classification Validation Program. For more information about these programs, see Data Quality Programs.
Pursuant to the California Insurance Code, the WCIRB maintains a Policyholder Ombudsman to assist employers in obtaining and evaluating policy information, such as loss experience, classification assignments, rating plans and systems, policy contracts, insurance regulations and other matters that impact their premium. The Ombudsman assists policyholders in seeking resolution in disputes with their insurers or the WCIRB. The Ombudsman also undertakes outreach efforts to increase public awareness of the position and to educate employers. Activities include speaking to employer and industry groups and conducting insurance industry training webinars. See the Policyholder Ombudsman section for more information.
In addition to its primary functions, the WCIRB engages in a number of related activities.
Lapse in Coverage Letters
When the WCIRB has no record of current coverage for an experience rated employer who has been insured within the last year, the WCIRB sends a letter directly to the employer requesting that the employer specify the name of its current insurance company. This procedure aids the WCIRB in determining whether its records are complete. Also, the WCIRB has participated periodically with the Commission on Health and Safety and Workers' Compensation, the Employment Development Department, and the Department of Industrial Relations in a program intended to identify unlawfully uninsured employers.
Review of Policy and Endorsement Forms
Member insurers are required to submit to the WCIRB duplicate copies of all new or revised policy and endorsement forms for preliminary examination. All documents are scrutinized by the WCIRB for both language and content and, as required, returned to the insurer for clarification or revision. Forms not previously approved by the California Department of Insurance as to form and substance are submitted by the WCIRB to the Department for approval.
Standard Workers' Compensation and Employers' Liability Policy and Endorsement Forms
The WCIRB develops and also reviews standard workers’ compensation policy and endorsement forms prepared by other workers’ compensation rating or advisory organizations and submits them to the California Department of Insurance for approval on behalf of the WCIRB’s members. The use of standard forms is not mandatory.
The WCIRB evaluates the cost impact of proposed workers' compensation benefit changes. Any proposed benefit changes, which are introduced to the state legislature as a bill, may be evaluated and distributed to public policy makers.
The WCIRB testifies before legislative committees with respect to proposed legislation that could impact workers' compensation costs or the workers' compensation rating systems when requested to do so by legislators or other interested parties. The WCIRB generally does not take a position on legislation.
Workers' Compensation Costs
The WCIRB annually provides, pursuant to Insurance Code Section 11759.1, an analysis of losses and expenses for the prior year. This report is available in the Research and Analysis section of the WCIRB website.
Solvency Monitoring Information
The WCIRB provides the California Department of Insurance a summary of each individual insurer's loss, expenses, premium, policy count and average price data to assist the Department in monitoring the solvency of the California workers' compensation market. This information is confidential and provided only to the California Department of Insurance.
Cal-OSHA Targeted Inspection Program
Pursuant to state law, the WCIRB periodically provides Cal-OSHA a listing of employers with an experience modification of 125 and greater for purposes of the Target Inspection Program.