One of the WCIRB’s core functions is ensuring that the Standard Classification System remains relevant to California’s ever changing business landscape. That’s why we have a unit dedicated to analyzing classifications to make sure that they continue to reflect distinct and identifiable industries comprised of employers engaged in a relatively similar set of operations. As industries grow, shrink, or significantly change the way they do business, the WCIRB’s classification research team will initiate a study to determine the extent to which the existing classification rules and procedures need to be updated to reflect the current state of the industry. Sometimes these studies are prompted by the WCIRB’s own field experience, research and analysis – other times they are conducted at the request of an employer association seeking a process that better reflects how they do business.
Once initiated, a classification study involves an in-depth analysis of both the nature of the industry’s operations as well as of the industry’s historical payroll and loss experience. This research forms the basis of the study’s findings, recommendations and impact analysis. WCIRB staff present for approval any proposed classification changes first to the Classification and Rating Committee and then to the Governing Committee. Recommendations approved by these Committees will be included in the WCIRB’s regulatory filing with the California Department of Insurance.
As an example of a recent classification study, earlier this year the WCIRB conducted a study at the request of the thoroughbred and quarter horse racing industry which asserted that the existing classification procedure did not result in the reliable collection of payroll and loss data. As a result of the study, the WCIRB is recommending a change to the basis of exposure for Classification 8631, Racing Stables – operation. See Report on Horse Racing.
Classification research reports provide an excellent view into both the classification process as well as the data that’s used in establishing advisory pure premium rates. Complete reports are available in the Research and Analysis section of WCIRB.com:
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