Basic Manual—2001 Edition
PART ONE—RULES
(Exceptions: AZ, NC)
Effective 01 Sep 2008 12:00:01A. EXPLANATION AND APPLICATION
1. Advisory Loss Cost, Authorized Rate and
Manual Rate
(Additional Rules: CT, FL, GA, NC, NE, OK, VA(A/R)) (Exceptions: VA)
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Advisory Loss Cost is the portion of the rate that represents projected
losses. The carrier adds an increment for expenses to the advisory
loss cost to develop the manual rate.
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Authorized rate is the manual rate or any other rate
that has been authorized by the appropriate insurance regulatory authority
for use by the carrier.
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Manual rate is the rate approved by the appropriate
regulatory authority for use by the carrier. It is the amount of premium
for each $100 of payroll.
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Either the advisory loss cost or manual rate for each
classification is shown on the state pages.
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2. Anniversary Rating Date (ARD)
(Exceptions: AL, IL, LA, ME ) (User's Guide: AL, IL, ME, OR)
The anniversary rating date is the effective month and day of
the policy in effect and each anniversary thereafter unless a different
date has been established by the National Council on Compensation
Insurance, Inc. or other licensed rating organization.
Rules, classifications, and rates are applied on an Anniversary
Rating Date basis for all risks. To determine the proper application refer to the tables
below:
ARD Table 1
(Exceptions: GA, OR)
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| For a single policy risk whose
. . .
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The insurance carrier must apply
. . .
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Policies have run consecutively, or,
The
risk is a new entity . . .
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The rates effective on the normal ARD for the full term
of:
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The policy beginning on that date, or
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Any other policy beginning up to three months after
that date
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Refer to User's Guide for an example.
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Policy has been cancelled and rewritten, either by the
same or another carrier within three months after the normal ARD .
. .
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To the rewritten policy, all rules, classifications and
rates of the rewriting carrier that were in effect as of the normal
ARD:
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Until the next ARD has been reached, or
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Until the next ARD is established by the rating organization
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Refer to User's Guide for an example.
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Policy has been cancelled and rewritten, either by the
same or another carrier more than three months after the normal ARD
. . .
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The rates in effect as of the normal ARD to the new
policy until the next normal ARD.
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The rates in effect as of the next normal ARD to the
new policy until the expiration date of the policy.
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The rates in effect as of the new ARD annually thereafter
as the new normal ARD. This will be the date that is 12 months after
the effective date of the new policy.
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Refer to User's Guide for an example.
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ARD Table 2
(Exceptions: GA)
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For a multiple policy risk with
varying effective
dates . . .
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The insurance carrier must apply
. . .
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That is not a long-term policy or Three-Year Fixed-Rate
Policy . . .
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The rates in effect on the normal ARD until the next
normal ARD:
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These rates apply to the portion of each policy falling
within the 12-month period, regardless of their effective and termination
dates.
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The renewal rates must be applied in the same manner.
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The ARD is determined by the policy with the largest
premium, unless otherwise established by the rating organization.
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Refer to User's Guide for an example.
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That has been cancelled and rewritten, either by the
same or another carrier . . .
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To the rewritten policy, all rules, classifications and
rates of the rewriting carrier that were in effect as of the normal
ARD
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Until the next ARD has been reached, or
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The next ARD is established by the rating organization
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ARD Table 3
(Exceptions: VA)
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| For other situations such as .
. .
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The insurance carrier must apply
. . .
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A long-term policy (issued for a period longer than one
year and 16 days, other than a Three-Year Fixed-Rate Policy) . . .
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All rules, classifications and rates to individual units
as if a separate policy had been issued.
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Divide the policy into consecutive units of 12 months
each.
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This division will designate either the first or last
unit of less than 12 months as a short-term policy.
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Refer to User's Guide for an example.
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A Three-Year Fixed-Rate Policy . . .
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The rates in force on the effective date of the policy
without change until its termination.
Exceptions:
A single rate revision resulting
in an increase of 10% or more on outstanding policies must be applied
to the remaining portion of the policy
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ARD Table 4
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| Applicable Endorsements |
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Use the Standard Anniversary Rating Date Endorsement
(WC 00 04 02) when necessary. The endorsement is used to show the
normal anniversary rating date if different from the policy effective
date.
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Use the Standard Policy Period Endorsement (WC 00
04 05) if the policy period is not a multiple of 12 months. This endorsement
is used to designate the first or last unit of less than 12 months
as a short-term policy.
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3. Cancellation Provisions
(Additional Rules: OR, VA)
The cancellation condition of the Standard
Policy permits cancellation by the insured or by the insurance carrier.
Most states regulate these cancellations.
b. Reasons for Cancellation and Premium
Determination
(Additional Rules: NH, VA)
The way in which the premium is calculated for cancelled policies
depends on the reason for cancellation:
Cancellation Provisions Table 1
(Exceptions: FL, HI, OR)
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| If . . . |
Then . . . |
| The policy is cancelled by the insurance carrier . . . |
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1.
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Apply authorized rates to the payroll developed during
the period the policy was in effect.
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2.
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Apply an experience modification in accordance with
rules of Experience
Rating Plan Manual for Workers Compensation and Employers Liability
Insurance.
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3.
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Add the pro rata portion of the expense constant,
but not less than $15.
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4.
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The total premium for the cancelled policy must not
be less than the pro rata portion of the minimum premium.
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Cancellation Provisions Table 2
(Exceptions: HI, OR)
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| If . . . |
Then . . . |
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The policy is cancelled by the insured when retiring
from business such that:
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All the work covered by the policy has been completed,
or
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All interest in any business covered by the policy
has been sold, or
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The insured has retired from all business covered
by the policy . . .
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| Note:
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For the purpose of this rule, a
change in the ownership of a corporation that results in the elimination
of experience under the rules of Experience Rating Plan Manual for Workers Compensation
and Employers Liability Insurance is not considered
retiring from the business insured by the policy.
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1.
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Apply authorized rates to the payroll developed during
the period the policy was in effect.
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2.
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Apply an experience modification in accordance with
rules of Experience
Rating Plan Manual for Workers Compensation and Employers Liability
Insurance.
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3.
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Add the pro rata portion of the expense constant,
but not less than $15.
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4.
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The total premium for the cancelled policy must not
be less than the pro rata portion of the minimum premium.
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Cancellation Provisions Table 3
(Exceptions: HI, OR)
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| If . . . |
Then . . . |
| An assigned risk policy is being cancelled because the insured
replaced coverage through the voluntary market . . .
|
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1.
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Apply authorized rates to the payroll developed during
the period the policy was in effect.
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2.
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Apply an experience modification in accordance with
rules of Experience
Rating Plan Manual for Workers Compensation and Employers Liability
Insurance.
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3.
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Add the pro rata portion of the expense constant,
but not less than $15.
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4.
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The total premium for the cancelled policy must not
be less than the pro rata portion of the minimum premium.
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Cancellation Provisions Table 4
(Exceptions: AK, AL, FL, HI, IA, SD, OR, VA, WV) (User's Guide: AK)
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| If . . . |
Then . . . |
| The policy is cancelled
by the insured, except when retiring from the business . . .
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The premium for the cancelled policy must be calculated as
follows, based on the Short Rate Factor Table located in the Appendix:
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1.
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Determine the payroll developed during the period
the policy was in effect.
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2.
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Determine the full policy payroll by extending such
payroll pro rata based on the number of days for which the policy
was written divided by the number of days the policy remained in force.
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3.
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Calculate the extended number of days by using the
following formula:
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| number of days
the policy was in effect |
x 365 |
| number of days for which
the policy was written
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4.
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Apply authorized rates to such payroll.
If the policy was written for a one-year period, the extended number
of days is the number of days the policy was in effect.
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5.
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Based on the extended number of days,
apply the short-rate percentage shown in the Short Rate Cancellation
Table located in the Appendix to the premium calculated on the basis
of the extended payroll. This result is the short-rate portion of
the premium.
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6.
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If applicable:
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Apply any experience rating modification
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Apply any premium discount based on the final earned
total standard premium
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Add the short-rate portion of the expense constant
but not less than $15
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7.
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The total earned premium for the cancelled
policy must not be less than the annual minimum premium applicable
to the policy.
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4. Classifications, Loss Costs or Rates
Subject to Admiralty Law, FELA, and USL&HW Act
(Additional Rules: AK, VA, VA(A/R))
a. F-Classification Codes and Admiralty/FELA
Classifications That Include USL&HW Act Benefits
(Additional Rules: FL)
The rates for classification codes followed by the letter “F”
and those admiralty/FELA classifications applicable to Program II—USL&HW
Act benefits include premium for operations that are subject to the
USL&HW Act.
b. Non F-Classification Codes and Admiralty/FELA
Classifications That Do Not Include USL&HW Act Benefits
The rates for non F-classifications and Admiralty/FELA classifications
under Program I and II—State Act do not include premium for operations
subject to the USL&HW Act. If operations assigned to these classifications
include employees that are subject to the USL&HW Act, apply the following:
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Assign the non F-classification that describes the duties
performed.
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Increase the rate and minimum premium for the non F-classification
by the USL&HW Coverage Percentage found in the state pages.
| Note:
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This factor is not applied to expense constants.
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Apply the increased rate to that portion of an employee's
payroll that is subject to the USL&HW Act.
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c. Waters Not Subject to Admiralty Jurisdiction
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Insurance for operations on waters not subject to Admiralty
Jurisdiction must be provided by the Standard Policy and Endorsement Forms
and is subject to the rules that apply to statutory workers compensation insurance.
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Admiralty classifications and rates for Program II apply to
these operations.
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The advisory loss cost for each classification is shown after
its code number in the state pages of this manual
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The manual rate for each classification is the authorized
rate approved by the appropriate insurance regulatory authority for use by
the carrier
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For details on these Acts, refer to Additional
Coverages Summary Table located in F-7 of the User's Guide. For
additional information on classifications, refer to
Program I and Program II Classification Comparison Tables in F-3 of the User's Guide.
d. Extensions of the USL&HW Act
(Exceptions: FL, VA)
Premium for extensions of the USL&HW Act is determined in the same
manner as the premium for the USL&HW Act. Refer to User's Guide B and User's Guide F-7 for more information on these extensions.
5. Combination of Legal Entities, Locations and
Operations
a. Legal Entities
(Exceptions: NM)
Separate legal entities may be insured by one policy only if
the same persons, or group of persons, own the majority interest in
such entities. Where combination of separate entities is permissible,
a single policy may be issued to insure more than one corporation.
For additional details, refer to Experience Rating Plan Manual
for Workers Compensation and Employers Liability Insurance.
Classifications are applied separately to each legal entity.
b. Locations and Operations
(Additional
Rules: KS)
All operations of any one employer at a single location must be insured
on one policy.
All locations and operations of the employer in a state must be insured
on one policy if required by the state workers compensation law.
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Deposit Premium is the initial payment required by an insurance
carrier to provide coverage. This amount is established by the carrier
and is subject to periodic premium adjustment.
| Note:
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The following rules, as they appear in this manual,
do not apply unless approval for their use is obtained by or on behalf
of the carrier from the appropriate insurance regulatory authority.
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a.
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Adjustment of premium may be on an annual basis or
the policy may provide for interim adjustment and payment of premium
on a monthly, quarterly or semiannual basis.
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b.
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The deposit premium is credited to the final earned
premium or renewal policy. It cannot be credited to any interim premium
adjustment.
For assigned risk policies, refer to the state assigned risk
pages for the applicable payment program.
For deposit premium determination on Three-Year Fixed-Rate policies, refer to Rule 3-B.
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a.
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Advisory loss costs and manual rates include premium
for the disease exposures covered by the Standard Policy.
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b.
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Supplemental disease loading may be added to a manual
rate applicable to an individual risk. The supplemental disease loading
proposed must be based on the carrier's judgment after an evaluation
of the operations.
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c.
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Specific Disease Loading
(Additional Rules: FL, LA, MO, VA)
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The advisory loss costs or manual rates for classification
code numbers followed by the symbol “D” or “E”
on the state pages include specific disease loadings. These loadings
reflect specific disease hazards involved in the operations assigned
to those classifications.
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The carrier may remove the specific disease loading
from a manual rate when the substance for which the disease loading
was established is not present or is insignificant in the operations
of the insured.
Exception to 7-c above:
For silicosis, the specific disease loading may be removed when
not more than 5% free silica is present.
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d.
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Partial application of a specific disease loading
is permissible based on the carrier's judgment after an evaluation
of the operations.
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e.
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Supplementary disease advisory loss costs or rates
shown on the state pages reflect hazards involved in foundry, abrasive,
or sandblasting operations.
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Supplementary disease rates for Codes 0065—Incidental
Foundries—Steel, 0066—Incidental Foundries—Non-Ferrous
Metals, and 0067—Incidental Foundries—Iron must be applied
to the payroll of employees exposed to the foundry hazard, except
employees assigned to Codes 3081, 3082, 3085, and 3175.
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Supplementary disease rate Code 0059—Abrasive
or Sandblasting must be assigned to the payroll of employees exposed
to these hazards.
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Effective Date of a policy is the starting date of the policy, the time
at which insurance coverage begins.
9. Estimated Annual Premium
Estimated Annual Premium is based on the estimated payroll for the policy
period. Estimated payrolls for each classification reflect actual
payroll anticipated by the insured during the policy period. Such estimates
are subject to substantiation by the carrier through evaluation of records
or inspections. For details, refer to User's Guide D-2-g(4) or the Example section.
10. Exclusion of Statutory Medical Benefits—Ex-Medical
Coverage
(Additional Rules: CO, IA, MO) (Exceptions: AK, AR, AZ, DC, GA, KS, ME, MS, NE, NH, OK, OR, TN, UT, VA, VA(A/R), WV)
Ex-medical rating is the rating of workers compensation policies
that excludes medical coverage. In states where ex-medical coverage
is permitted, the carrier does not provide medical payment coverage,
and a reduced manual rate applies.
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For any location insured on an ex-medical basis, use
the ex-medical rates to calculate premium for the applicable classifications.
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Ex-medical loss costs and rates are printed on the
state pages of this manual for hospital classifications.
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Ex-medical rates for hospital and other classifications
may be obtained from the carrier in competitive rating jurisdictions.
Otherwise, such rates may be obtained from NCCI or other licensed
rating organization.
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11. Expense Constant
(Additional Rules: AZ) (Exceptions: FL, HI, ID, NC, OK, VA) (User's Guide: ID)
Expense Constant is a premium charge that is applied to every
policy regardless of premium size. The expense constant contributes
to the recovery of expenses common to issuing, recording, and auditing
a policy. The expense constant charged at the inception of the policy
will not change when a state is added or deleted during the policy
term.
In competitive rating jurisdictions, the expense constant is
filed by or on behalf of the carrier. In administered pricing jurisdictions,
the expense constant is shown on the state pages.
Note: The following rules,
as they appear in this manual, do not apply unless approval for their
use is obtained by or on behalf of the carrier from the appropriate
insurance regulatory authority.
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a.
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The expense constant is:
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Not subject to premium discount, experience rating modification, retrospective rating adjustment, or additional charges for
the catastrophe provisions detailed in Rule 3-A-24.
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Included in the minimum premium for each classification
and must not be added to the minimum premium if the minimum premium
becomes the final premium for the policy
|
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Shown on the Information Page of the policy. For details, refer to User's Guide D-2-g(6).
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Refer to User's Guide for an example.
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b.
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When more than one state is insured on the same policy,
the highest expense constant must be charged even if that state is
on an “if any” basis.
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c.
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The expense constant must be excluded from the determination
of standard premium.
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d.
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Full expense constants must be charged for short-term
policies.
Exceptions:
Expense constants are prorated when short-term policies are
issued:
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To replace a binder
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Solely to establish consistent effective dates with
other insurance policies
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e.
|
In addition to the exception to Rule 3-A-11-d above,
expense constants are prorated when a policy is cancelled:
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By the insurance carrier according to Cancellation
Provisions Table 1
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When the insured is retiring from business according
to Cancellation Provisions Table 2
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f.
|
The prorated portions of the expense constant in d.
and e. above must not be less than $15.
For expense constant determination on Three-Year Fixed-Rate
policies, refer to Rule 3-B.
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12. Federal Coal Mine Health and Safety Act
(Exceptions: NC) (Additional Rules: VA, VA(A/R))
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a.
|
In states where disease coverage is provided for risks subject
to the Federal Coal Mine Health and Safety Act, this coverage is not subject
to:
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Experience rating
|
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Premium discounts
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Retrospective rating
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b.
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Advisory loss costs or rates for this coverage and any underlying
state law coverage for disease are shown separately in the state pages.
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c.
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Advisory loss costs or rates for employers not described by
a coal mine classification and for former coal mine operators are determined
by the carrier, and are not shown separately in the state pages.
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d.
|
In states where there are no coal mines, the state pages will
not include the advisory loss cost and rate information for this coverage.
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13. Final Earned Premium
(Additional
Rules: CT, ME, NC, NE, SC[___])
Final Earned Premium is the total premium earned during the policy term.
It is calculated using actual payrolls multiplied by the rate for each classification.
Final earned premium includes the application of premium elements applicable
to the insured.
Final earned premium for the policy must be determined on actual payroll
as determined by the carrier at audit, instead of on estimated payroll or
other premium basis.
Determination of final earned premium is governed by the rules, classifications,
and rates in this manual, subject to modification by applicable rating plans.
The insurance carrier has the right to calculate earned premium based
on an examination of original payroll records and accounting records of the
insured.
Audited information must coincide with the effective and expiration
dates of the policy. Reasonable deviations from this standard that do not
affect the earned premium are permitted to coordinate the audit with the first
of the nearest month.
Refer to User's Guide for an example.
a. Standard Limits of Liability
Standard limits of liability apply to Employers Liability Insurance:
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With or without Workers Compensation Insurance
|
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For employees subject to Voluntary Compensation Insurance
|
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For operations subject to USL&HW Act
|
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For damages under admiralty law or FELA
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(1) Bodily Injury by Accident
Bodily Injury by Accident (each accident limit) applies to all bodily
injury resulting from a single accident.
(2) Bodily Injury by Disease
Bodily Injury by Disease is represented by two limits:
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Each Employee Limit
Each Employee Limit is the maximum amount of damages that an insurer
will pay for a single employee during the policy
year. It applies as a separate limit to bodily injury by disease to
any one employee.
|
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Policy Limit
Policy Limit is an aggregate limit that applies to all bodily injury
occurring from disease during the term of the policy, regardless of the number
of employees who are injured by disease. An aggregate limit is the maximum
amount of damages that an insurer will pay during the policy year.
Table for Standard Limits
(Exceptions: FL, HI, MO, OR, VA)
|
| |
Employers Liability, Voluntary
Compensation, USL&HW Act and Extensions
|
Admiralty Law and FELA |
| Bodily Injury by Accident |
$100,000—each accident |
$100,000 |
| Bodily Injury by Disease |
$100,000—each employee |
Not applicable |
| Bodily Injury by Disease |
$500,000—policy limit |
$100,000 |
|
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b. Increased Limits of Liability
Increased Limits of Liability are available under Part Two—Employers
Liability. Accordingly, the standard limits may be increased.
Any additional premium for increased limits must be calculated before
application of:
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| •
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Expense constants
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Experience rating modification
|
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Merit rating modification
|
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Schedule
rating modification
|
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Premium discount
|
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Retrospective rating adjustment
|
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Deductible credits
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(1) Standard Policy
(Additional Rules: FL, VA, VA(A/R)) (Exceptions: NE[ ___ ])
Employers Liability (E/L) Increased Limits Factor is a factor
that is applied to the manual premium if the employer chooses to increase
its standard limits under Part Two—Employers Liability.
If the limits of liability under Part Two are increased:
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(a)
|
The limits of liability must be the same for all states
specified in Item 3A of the Information Page of the policy.
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(b)
|
The additional premium for increased limits must be
determined by multiplying the total manual premium by the percentage
in the Table for Increased Limits.
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(c)
|
In competitive rating jurisdictions, the additional
premium must not be less than the minimum premium, if any, filed by
or on behalf of the carrier and approved for use by the appropriate
insurance regulatory authority.
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(d)
|
In administered pricing jurisdictions, the additional
premium must not be less than the minimum premium shown in the Table
for Increased Limits.
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(e)
|
For assigned risk policies, the additional premium
must not be less than the minimum premium shown in the Table for Increased
Limits.
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Table for Increased Limits*
(Exceptions: AK, AZ, FL, GA, HI, MO, OR, VA)
|
| Limits of Liability |
|
Percentage |
|
Minimum Premium For Increased
Limits
|
| (000 omitted) |
|
|
|
|
| $ 500/500/500 |
|
1.7% |
|
$100.00 |
| 1,000/1,000/1,000 |
|
2.8 |
|
150.00 |
| 2,000/2,000/2,000 |
|
4.3 |
|
175.00 |
| 3,000/3,000/3,000 |
|
5.3 |
|
200.00 |
| 4,000/4,000/4,000 |
|
6.1 |
|
225.00 |
| 5,000/5,000/5,000 |
|
6.8 |
|
250.00 |
| 6,000/6,000/6,000 |
|
7.4 |
|
260.00 |
| 7,000/7,000/7,000 |
|
7.9 |
|
270.00 |
| 8,000/8,000/8,000 |
|
8.3 |
|
280.00 |
| 9,000/9,000/9,000 |
|
8.7 |
|
290.00 |
| 10,000/10,000/10,000 |
|
9.0 |
|
300.00 |
| *Refer to
Appendix C for additional limits values.
|
|
(2) Employers Liability Insurance—Without
Workers Compensation Insurance
(Additional Rules: VA) (Exceptions: AR, FL, TN, VA(A/R)[ ___ ])
The standard limits of employers liability insurance may be increased.
If higher limits of liability apply, the premium is determined on the basis
of the rates multiplied by the factors filed by or on behalf of the carrier
and approval for their use is obtained from the appropriate insurance regulatory
authority.
(3) Voluntary Compensation Insurance
(Additional
Rules: IL)
(Exceptions: VA(A/R))
The standard limits under Part Two—Employers Liability Insurance
for employees subject to Voluntary Compensation Insurance may be increased.
The premium for the increased limits must be determined by using the Table
for Increased Limits provided in Rule 3-A-14-b(1) above.
(4) Admiralty Law/FELA
(Exceptions: HI)
The total premium including increased limits must be determined
by applying the factor in the Table for Increased Limits provided
below to the total premium for admiralty or FELA classifications.
The minimum premium for increased limits is in addition to the
policy minimum premium at standard limits of liability, and applies
although coverage for increased limits may have been added during
the policy term. Refer to Rule 3-A-16-b for additional minimum premium information.
Table for Increased Limits*
(Exceptions: AK, AZ, FL, GA, HI, LA, VA)
|
| |
Factor |
Minimum Premium |
| Limit Per Accident |
Program I |
Program II |
Program I |
Program II |
| $100,000 |
1.00 |
1.00 |
$115 |
$230 |
| 150,000 |
1.17 |
1.15 |
119 |
238 |
| 200,000 |
1.30 |
1.28 |
123 |
246 |
| 300,000 |
1.51 |
1.48 |
129 |
258 |
| 400,000 |
1.68 |
1.63 |
134 |
268 |
| 500,000 |
1.80 |
1.75 |
138 |
276 |
| *Refer to Appendix C for additional limits values.
|
|
(5) USL&HW Act and Extensions of the USL&HW
Act
Rule 3-A-14-b(1) above applies to policies that include coverage for
the USL&HW Act and/or its extensions.
16. Minimum Premium
(Additional Rules: AZ, VA) (Exceptions: FL)
The following rules, as they appear in this manual, do not apply
unless approval for their use is obtained by or on behalf of the carrier
from the appropriate insurance regulatory authority.
a. Standard Policy
(Exceptions: HI, OK)
Minimum Premium is the lowest premium that is required in order to provide
insurance under the Standard Policy. Minimum premium must be shown on the
Information Page of the policy. Minimum premium is not subject to an experience
rating modification. For details, refer to User's Guide D-2-g(7).
In competitive rating jurisdictions, minimum premiums are filed by or
on behalf of the carrier. In administered pricing jurisdictions, the minimum
premiums are shown on the state pages.
b. Determination
(Additional Rules: AK, AZ, KS, ME, NV) (Exceptions: AL, FL, GA, KS, SD, VA, VA(A/R))
| |
|
(1)
|
The minimum premium at policy issuance is determined
as follows:
| |
| •
|
For a policy with only one classification, apply the
minimum premium for that classification.
|
| •
|
For a policy with two or more classifications, apply
the highest minimum premium for any classification on the policy.
|
|
|
|
(2)
|
The minimum premium is subject to final adjustment
at final audit. It is determined on the basis of those classifications
developing premium as follows:
| |
| •
|
If the final earned premium is less than the minimum
premium determined on audit, then that minimum premium must be charged.
|
| •
|
If no classification develops premium, the minimum
premium for Code 8810 must be charged.
|
| •
|
When more than one state is insured on the same policy,
the highest minimum premium must be charged even if that state is
on an “if any” basis.
|
|
|
|
(3)
|
Full minimum premiums are charged for short-term policies,
subject to 4. below.
|
|
(4)
|
The minimum premium is prorated when:
| |
| •
|
A short-term policy is issued to replace a binder
|
| •
|
A short-term policy is issued to establish consistent
effective dates with other insurance policies
|
| •
|
A policy is cancelled by the insurance carrier according
to Cancellation Provisions Table 1
|
| •
|
A policy is cancelled when the insured is retiring
from business according to Cancellation Provisions Table 2
|
|
|
|
(5)
|
In the event that a policy is cancelled midterm, the
minimum premium for increased limits for employers liability and federal
coverages must be treated the same as the classification minimum premium.
| |
| •
|
Cancellation may occur by the carrier or by the insured
when retiring from business. When this happens, the total premium
for the policy must not be less than the pro rata portion of the minimum
premium.
|
| •
|
If cancellation occurs by the insured, and the insured
is not retiring from business, the total earned premium for the cancelled
policy must not be less than the applicable annual minimum premium.
|
|
|
|
(6)
|
For a policy that provides only employers liability
insurance with increased limits, the minimum premium must be increased
by the factor that applies to the rates for that policy.
For minimum premium information for Domestic Workers, refer to Rule 3-C-5-c.
|
|
c. Admiralty Law/FELA
(Additional
Rules: HI)
A separate minimum premium applies to a policy that includes classifications
for operations subject to admiralty law or FELA if filed by or on behalf of
the carrier, and if approval for its use is granted by the appropriate insurance
regulatory authority. In administered pricing jurisdictions, it must not be
less than the minimum premium shown in the Table for Increased Limits in Rule
3-A-14-b(4).
| |
| •
|
This minimum premium is the lowest premium for insuring admiralty
or FELA operations
|
| •
|
It must apply in addition to the minimum premium or premium
for other operations on this type of policy
|
| •
|
It is not subject to an experience rating modification
|
|
Rules 3-A-16-a. and b. above apply to policies that include USL&HW
Act coverage.
For minimum premium determination on Three-Year Fixed-Rate policies, refer to Rule 3-B-2.
17. Nonratable Element
(Additional
Rules: FL[ ___ ])
A nonratable element is a supplementary loading or percentage included
in the development of the manual rate for a particular classification. It
adjusts for the classification's potential for occupational disease or catastrophic losses. Premium for a nonratable
element is not subject to experience rating or retrospective rating.
18. Other States Insurance
(Additional
Rules: VA(A/R))
Premium developed for operations covered under Part Three—Other
States Insurance is based on the workers compensation rules and rates. Refer to User's Guide A-3 for more information.
Premium Discount is a percentage discount that is based on the
size of the total standard premium. Refer
to Rule 3-A-20 for information on standard premium.
| Note:
|
The following rules, as they appear in this manual,
do not apply unless approval for their use is obtained by or on behalf
of the carrier from the appropriate insurance regulatory authority.
|
Premium discount does not apply to the portion of the standard
premium under a Retrospective Rating Plan.
a. Determination of Premium Discount
(Additional
Rules: FL)
A policy qualifies for premium
discount when the standard premium exceeds the eligibility amount
authorized by the insurance regulatory authority.
Total standard premium is subject to premium discount as follows:
(1) Without Retrospective Rating
(Additional
Rules: KY)
(Exceptions: FL[ ___ ])
| |
| •
|
Single State Policy
Premium discount is determined by applying the appropriate discount
percentages to the total standard premium in excess of the authorized threshold
amount.
|
| •
|
Multiple State Policy
Premium discount applies on an interstate basis. It is determined by
applying the appropriate discount percentages to each state's portion of the
total standard premium in excess of the authorized threshold amount.
Each state's portion of the threshold amount and varying gradations
of premium
discount are calculated by multiplying the total standard premium
by the ratio of state standard premium to the total standard premium.
|
|
Refer to User's Guide for an example.
(2) With Retrospective Rating
The portion of the standard premium subject to a Retrospective Rating
Plan is not subject to premium
discount.
Total the premium of all entities to determine the amount subject to
the Retrospective Rating Plan. The remainder of that standard premium is subject
to premium
discount and is calculated as follows:
| |
|
(a)
|
Determine the discount (x) as if none of the premium is subject
to retrospective rating
|
|
(b)
|
Determine the discount (y) for the premium subject to retrospective
rating only
|
|
(c)
|
The premium
discount is the difference between (x) and (y)
The total premium
discount is distributed by state by allocating the state portion of
standard premium to the premium
discount.
Refer to User's Guide for an example.
|
|
(3) Other Methods
(Exceptions: WV)
Any other method of determining premium discount may be used as long as the result does not
differ by more than 0.1% of the standard premium from the premium discount produced by the methods outlined in this
rule.
Refer to Appendix A for Premium Discount Tables.
b. Combination of Policies
(Additional
Rules: CO[ ___ ]) (Exceptions: IL)
For the purpose of calculating premium
discount for two or more policies that are issued to the same insured
by one or more carriers that are under the same management, the total standard
premium for those policies must be combined. This applies unless the insured
instructs the carrier otherwise.
If the policies being combined have different expiration dates:
| |
|
(1)
|
Either NCCI or another licensed rating organization must determine
the policy effective date for application of the premium discount
|
|
(2)
|
All policies in effect before the established effective date
must be cancelled and rewritten as of the established effective date
|
|
(3)
|
All policies written to be effective after the established
effective date of the combination of policies must be written to expire on
the same date as the other policies in the combination
Refer to User's Guide for an example.
|
|
c. Wrap-Up Construction Projects
(Additional Rules:AK, CT, MO, NE, SC, TN, VA) (Exceptions: AK, AR, HI, KS, [ ___ ], MO, MS, OK, OR)
For purposes of determining premium discount for wrap-up policies
that are issued to two or more legal entities, the following conditions
must be met:
| |
|
(1)
|
All policies must be issued by one or more insurance
carriers that are under the same management.
|
|
(2)
|
None of the policies can be issued on a retrospective
rating basis.
|
|
(3)
|
The policies are limited to providing the insurance
on the large construction project. To limit the insurance to a specific
project, attach the standard Designated Workplaces Exclusion Endorsement
(WC 00 03 02).
|
|
(4)
|
Combinable entities are limited to the following:
| |
|
(a)
|
General contractor, including any owner or principal acting
as a general contractor.
|
|
(b)
|
Subcontractors performing work under contracts let on an ex-insurance
basis.
| Note:
|
If the contract between the owner or principal and
the general contractor is written on an ex-insurance basis, the owner
or principal is eligible under this rule.
|
|
|
Refer to Rule 3-A-19-a(2) for premium
discount determination for policies where a portion of the premium
is written on a retrospective rating basis. Any discounted premium
is allocated to all entities proportionate to their share of the standard
premium. Refer to Rule 3-A-23 for more information on wrap-up construction projects.
|
|
20. Standard Premium
(Exceptions: VA, NC)
Standard Premium is the premium before the application of the
premium discount.
It is the state premium determined on the basis of:
| |
| •
|
Authorized rates
|
| •
|
Disease loadings
|
| •
|
Nonratable elements
|
| •
|
Aircraft seat surcharges
|
| •
|
Premium for increased limits of liability
|
| •
|
Experience rating modification
|
| •
|
Applicable schedule rating modification
|
| •
|
Minimum premiums
|
|
Total Standard Premium is the total premium for all states covered
by the policy excluding expense constant, additional charges for the catastrophe provisions detailed in Rule 3-A-24, and any
disease
charge subject to the Federal Coal Mine Health and Safety Act before
the application of the premium discount.
Refer to state pages concerning the
application of the above rating elements, or any state special rating
elements.
| Note:
|
The Annual Financial Calls for experience, which
are used for ratemaking, contain a different definition of standard premium.
|
21. States Added After Policy Effective Date
(Additional Rules: VA(A/R))
A state may be added after the effective date of the policy. For the
additional state operations, apply:
| |
|
a.
|
Manual rates in effect on the anniversary rating date of the
policy to which the state has been added
|
|
b.
|
Any rate change that applies to outstanding policies for the
state being added, and
|
|
c.
|
Any applicable experience rating modification for the policy
to which the state has been added. Refer to Experience Rating Plan Manual.
|
|
The premium for this endorsement (WC 00 03 13) is based on a charge determined by the carrier
from its evaluation of the exposures.
In jurisdictions where NCCI is the assigned risk administrator,
a set fee exists for assigned risk policies only. The charge for assigned
risk policies is 5% of the manual premium with $250 minimum premium.
23. Wrap-Up Construction Projects
(Additional Rules: CT, FL, NV, VA) (Exceptions: AK, AR, KS, [ ___ ], MS, OK, OR)
A wrap-up construction project is a large construction, erection
or demolition project for which policies have been issued by one or
more carriers under the same management, to insure two or more legal
entities that are working on the project.
Appropriate classifications are assigned to each separate legal
entity based on the operations performed.
In the instance of wrap-up construction projects, separate policies
must be issued to each eligible entity involved in the project, unless
the same person or group of persons owns the majority interest in
such entities. Refer to Rule 3-A-15 for more information about majority interest.
The Designated Workplace Exclusion Endorsement (WC 00 03 02) should be attached to other insurance policies
issued to the same entities to exclude the wrap-up project from coverage
on those other policies. This eliminates any duplication of coverage.
24. Catastrophe Provisions
(Exceptions: AK, FL, MO, NM, VA)
| |
|
a.
|
Terrorism Risk Insurance Act
(TRIA) of 2002 and any amendments thereto enacted by Congress.
|
|
b.
|
Catastrophe (other than Certified Acts of Terrorism)
Premium for Catastrophe (other than Certified Acts of Terrorism)
is calculated on the basis of total payroll according to Rule 2. A
risk’s total payroll in each state is divided by units of $100
and multiplied by the appropriate value found in the state pages.
The calculation is expressed as (Payroll/100 x Catastrophe (other
than Certified Acts of Terrorism) Value = Premium). This premium is
applied after standard premium and is not subject to any other modifications
including, but not limited to, premium discount, experience rating,
schedule rating, or retrospective rating.
Unless an “If Any” policy develops premium during
the policy term or at audit, policies issued on an “If Any”
basis will not be charged this premium.
Per capita charges are not subject to premium under this Act.
|
|
c.
|
Terrorism
Premium for Terrorism is calculated on the basis of total payroll
according to Rule 2. A risk’s total payroll in each state is
divided by units of $100 and multiplied by the appropriate value found
in the state pages. The calculation is expressed as (Payroll/100 x Terrorism Value = Premium). This premium is applied after
standard premium and is not subject to any other modifications including,
but not limited to, premium discount, experience rating, schedule
rating, or retrospective rating.
Unless an “If Any” policy develops premium during
the policy term or at audit, policies issued on an “If Any”
basis will not be charged this premium.
Per capita charges are not subject to premium under this Act.
|
|
©
Copyright 2000–2009
National Council on Compensation Insurance, Inc. All Rights Reserved.
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