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The Workers’ Compensation Insurance Rating Bureau announced this week that approximately 65% of experience rated policyholders received a lower experience modification than would otherwise have been the case as a result of rating formula changes. The changes were proposed by the WCIRB’s Experience Rating Task Force to simplify and improve the accuracy of the experience rating system.
According to the WCIRB, approximately 29% of policyholders received a higher experience modification and approximately 6% of the policyholders were unaffected by the 2010 formula changes. Roughly 5% of experience rated policyholders saw increases of between 11 and 20 points in their experience modifications, and approximately 2% saw increases of more than 20 points. The small percentage of policyholders who experienced large increases were employers with worse than average underlying loss experience.
On November 9, 2009, the Insurance Commissioner issued a decision approving several changes to the experience rating formula including updated credibility values ("B" and "W" values) and a revised mechanism for segregating claims into their primary and excess components.
The analysis of the approximately 115,000 2010 experience modifications that were issued through the end of September to determine the impact of these changes. The results of this analysis are consistent with the WCIRB's projections contained in the January 1, 2010 Pure Premium Rate Filing as well as the analysis performed in April 2010 on a population of approximately 57,000 2010 experience modifications.
For more information about this approved changes, click here.