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Accident Year

Refers to the year in which the accident or injury took place; it includes all accidents that occurred between January 1 and December 31 of the year, regardless of when the policies that covered them were effective or when the accidents were reported.


A professional who determines rates and rating methods, evaluates reserves, analyzes data trends, and has other statistical responsibilities.

Advisory Pure Premium Rates

Advisory rates prepared by the WCIRB and submitted to the CDI for approval. The rates reflect expected losses and loss adjustment expenses on a statewide basis for each of the industry classifications and may be used by insurers to establish their own premium rates

Aggregate Data

Data that is summarized by an insurer, an insurer group, and a time period (i.e., accident year); this data is not segregated by individual policy, individual claim or classification.


Allocated Loss Adjustment Expenses; in general, these are expenses incurred by an insurer in investigating and settling claims that can be assigned to a specific claim, such as legal fees.

Anniversary Rating Date

The effective date for which an experience modification is established for an employer; it is usually set based on the effective date of the preceding policy.

Basic Underwriting Manual

An advisory manual published by the WCIRB; it contains basic definitions and classification terms, premium and policy rules, and an alphabetical listing of the standard classifications.


Amount paid on a claim to or on behalf of an injured worker. See also "Indemnity."


A temporary legal contract of terms and conditions that is in force until an actual policy with the same terms and conditions is issued, or until the binder contract expires.


Bureau Number; a unique file number assigned by the WCIRB to each California insured employer.

Calendar Year

A year in which financial transactions, such as payment of claims, take place; the calendar year is the period from January 1 through December 31.


California Department of Insurance.

Class or Classification

A grouping of distinct and identifiable occupations, industries, or businesses. There are approximately 500 different classifications defined in the Standard Classification System of the California Workers' Compensation Uniform Statistical Reporting Plan - 1995.

Combination of Entities

A provision in the California Workers' Compensation Experience Rating Plan - 1995  that requires the experience of separate entities to be combined for experience rating when the same person or persons own(s) a majority interest in each of the entities.


California Workers' Compensation Institute; a non-profit organization of insurers licensed to write workers' compensation insurance in California.

Data Call

A request from the WCIRB to its members for aggregate financial data; for example, an Expense Call or a Quarterly Calendar/Accident Year Call.

Death Claim

A claim filed by the survivors or dependents of a worker who dies from a job-related incident.

Development Factor

Statistics showing how experience (generally losses) has changed from one historical period to another.


Department of Industrial Relations; a state agency designed to improve working conditions and advance opportunities for profitable employment in California.

Duplicate Coverage

Two or more policies insuring the same operations for the same or an overlapping period of time.


Division of Workers' Compensation; part of the DIR, the DWC monitors the administration of workers' compensation claims. 

Earned Premium

The portion of a premium that has been earned by the insurer for policy coverage already provided. For example, one half of the total premium will typically be earned six months into an annual policy term.

Effective Date

The date when policy coverage begins, or the date when an experience modification takes effect.


Every person in the service of an employer for whom the employer is obligated to provide workers' compensation benefits.

Employers' Liability Insurance

Provides coverage against the common law liability of an employer for injuries to employees, as distinguished from the liability imposed by the workers' compensation laws.


A form used to amend the provisions of an insurance policy.


The legal nature of the insured's business; can refer to an individual (sole proprietor), joint venture, partnership, limited liability partnership, corporation, limited liability company, unincorporated association, or fiduciary operation (i.e., trust, receivership, or estate of a deceased individual). An entity may own several and distinct businesses.

Excess Insurance

Insurance that covers the policyholder only for the portion of losses that exceed a certain dollar limit.

Expected Loss Rate (ELR)

The average rate at which losses for a classification are estimated to occur during an experience rating period; they are generally expressed as a ratio per $100 of payroll. Expected loss rates, which are contained in the California Workers' Compensation Experience Rating Plan - 1995, are approved annually by the Insurance Commissioner. 


Experience refer to the payroll and loss information for an entity or risk. It can be defined in terms of policy year, calendar year, accident year, report year, etc.

Experience Modification

An adjustment to an employer's premium based on comparing the employer's experience to the experience of its industry. Generally, an experience modification of less than 100% reflects better-than-average experience, while an experience modification of more than 100% reflects worse-than-average experience. Accordingly, an experience modification that is greater than 100% usually increases the cost of the employer's workers' compensation insurance premiums, while an experience modification that is less than 100% usually decreases the cost of the employer's workers' compensation insurance premiums. The experience modification formula can be found in the California Workers' Compensation Experience Rating Plan - 1995.

Experience Rating

California's workers' compensation experience rating system is a merit rating system intended to provide employers a direct financial incentive to reduce work-related accidents. The experience rating system objectively distributes the cost of workers' compensation insurance more equitably among employers assigned to particular industry classifications by deriving an experience modification for each eligible employer based on the experience rating formula in the California Workers' Compensation Experience Rating Plan - 1995  (Experience Rating Plan).  The eligibility threshold for experience rating for each year is specified in that year's Experience Rating Plan. Experience rating is applicable only to and mandatory for eligible employers.

Experience Rating Form

Refers to the experience rating form used by the WCIRB to calculate an employer's experience modification. Also called Experience Rating Worksheet.

Experience Rating Plan (ERP)

California Workers' Compensation Experience Rating Plan - 1995; contains the rules for experience rating an entity. The Experience Rating Plan is part of the California Insurance Commissioner's regulations for workers' compensation insurance.

Expiration Date

The date on which a policy ceases to provide coverage.


Refers to the basis upon which premium will be determined - typically payroll or number of employees.

Final Premium

The total premium charged to an employer for the insurance period, prior to any retrospective rating plan adjustments, deductible credits or policyholder dividends. See Part 4 of the California Workers' Compensation Uniform Statistical Reporting Plan - 1995  for a complete definition.


Number of claims per exposure unit, such as payroll, premium, etc.

Governing Classification

Generally, the classification to which the largest amount of payroll is assigned.

Immediate Family

For the purpose of determining changes in ownership for experience rating, immediate family includes father, mother, husband, wife, son, daughter, stepson, stepdaughter, grandson or granddaughter (but not sister, brother, cousin, niece or nephew.).

Inception Date

The date on which coverage by a policy commences.

Incurred Loss

The total of the paid indemnity and medical losses (claim amounts already paid) plus the future reserves (claim amounts expected to be paid in the future).


In general, an amount paid to an injured worker as a partial replacement of wages due to an injury. Indemnity also includes vocational rehabilitation-type benefits.

Inspection Report

A description of an employer's business processes that is prepared by the WCIRB after inspecting the employer's business premises. The report assigns classifications to employees, departments, or operations for statistical reporting purposes. An insurer also may use the assigned classifications for premium computation and underwriting purposes.

Joint Venture

A business enterprise formed by two or more entities that join together for a specific job.

Lapse in Coverage

The period of time during which an employer has no insurance.


Generally refers to the amount paid or expected to be paid for medical and indemnity benefits on a claim.

Loss Ratio

The ratio of losses to premium.

Loss Reserve

Funds set aside by an insurer to cover the insurer's estimated future liability for claims.

Material Change in Status

A determination by the WCIRB that, subsequent to a change in material ownership, the former owner's payroll and loss experience shall not be used in the new owner's experience modification. A change in status is made only pursuant to the provisions of the California Workers' Compensation Experience Rating Plan—1995.

Open Rating

A term used to describe a workers' compensation insurance pricing system that permits each insurer to set its own rates. Open rating became effective in California on January 1, 1995.

Paid Losses

Payments that the insurer or administrator has made to the claimant or to medical providers.


(See also "Remuneration".) Usually synonymous with compensation, gross wages, or salary. The most common basis for determining workers' compensation insurance premiums. For most classifications, rates are based on $100 of payroll.

Per Capita

Measurement of exposure that is not based on payroll. Examples include per person, per horse race, etc.

Policy Year

The calendar year in which a policy begins; a policy year covers any policy with an inception date between January 1 and December 31 of a given year.


The amount paid for an insurance policy.

Pure Premium Rates

See Advisory Pure Premium Rates.

Rate Filing

A document that is submitted at least annually by the WCIRB to the California Insurance Commissioner, recommending changes to pure premium rates. The Insurance Commissioner may approve, modify, or reject recommended changes following a public hearing.


The cost of insurance per unit of exposure such as per $100 of payroll.


Refers to compensation given to an employee; includes gross wages, salaries and commissions, bonuses, vacation, holiday and sick pay; etc.


A revision to a previously published experience modification. The California Workers' Compensation Experience Rating Plan - 1995  lists specific criteria under which an experience modification can be revised.

Retrospective Rating

An optional rating plan that adjusts the premium of a policy based on the losses incurred on the policy.

Safety Group

An association of employers in a common trade or business that join together for safety purposes in a group insurance policy.


The legal process by which an insurance company, after paying for a loss, seeks to recover all or a portion of the loss from another party who is legally wholly or partially liable for that loss.

Test Audit

An audit of an employer's records conducted by the WCIRB to evaluate the accuracy of the payroll audit performed by the insurer. To learn more about how the WCIRB evaluates insurer auditing practices to determine the accuracy and reliability of insurers' payroll audits, consult the WCIRB Premium Audit Accuracy Program.

Uniform Statistical Reporting Plan

California Workers' Compensation Uniform Statistical Reporting Plan - 1995also known as the USRP; contains instructions for filing policy documents and requirements for reporting premium, payroll and claim data. It also contains the Standard Classification System. The Uniform Statistical Reporting Plan is part of the California Insurance Commissioner's regulations of workers' compensation insurance.

USR (Unit Statistical Report)

Refers to a Unit Statistical Report which is used to report premium and detailed payroll and claim information for a policy to the WCIRB.

Vocational Rehabilitation

The benefits paid to train an injured worker for productive employment whenever the injury permanently precludes the worker from returning to his/her pre-injury job.


Workers' Compensation Appeals Board (California); judicial body appointed by the California Governor that reviews the petitions for reconsideration of decisions by workers' compensation administrative law judges.


Workers' Compensation Insurance Rating Bureau of California

Workers' Compensation Insurance

Obligates the insurer to pay to a worker injured on the job all benefits required by law. Benefits are paid on behalf of the insured employer regardless of fault.

Written Premium

The premium registered on the books of an insurer at the time a policy is issued and paid for.


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