Experience Rating: Corrections

Rules regarding the correction of experience ratings, and their effect on premium.

When a policy needs a change to the experience rating modification, the Experience Rating Plan Manual outlines specific rules regarding the effective date. Below are summaries of relevant rules. 

Mod Correction:

Experience Rating Plan Manual Rule 4-E​ 

decreasepolicy inception (whether during policy or at audit)
increasea. first 90 days – inception
b. after 90 days – pro rata
(when carrier receives revised mod)
increasepolicy inception; when due to:
a. delays or failures caused by employer or agent
b. retroactive reclassification
c. change in ownership (see Rule 3-E-3, old rule Part Two, Rule C.10)

Revising previous ratings: Experience Rating Plan Manual Rule 3.E.1The rating organization may issue, retract and/or revise the current and up to two preceding modifications due to ownership or combination status changes.

Recalculated mod due to change in ownership: Experience Rating Plan Manual Rule 3.E.3

  • notification within 90 days of change – revise mod as of date of change
  • notification after 90 days of change – revise mod as of next anniversary rating date

    Note: Generally this rule (3.E.3.) is applied to ownership changes unless unusual circumstances might require the application of Rule 3.E.1., Transfer of Experience, or Rule 3.F., Evasion of ER Mod.

Mod Revision due to Payroll or Loss Changes: Experience Rating Plan Manual Rule 4.B. 

  1. An insurance provider may discover within the audit period (within three years of policy expiration) that previously reported payroll must be revised. We can revise the current and up to two preceding experience modifications under several circumstances. For purposes of subrogation and special fund recovery situation, the time frame for the three (current and two preceding) modifications is limited to the risk’s fifth most recent rating effective date.

    Noncompensable claim is addressed in the old manual Part Two, Rule D.4.d., page 7, but not mentioned in the new manual. However, the new manual, Rule 4.B.2.a., requires submission of revised unit reports according to the Statistical Plan will result in the automatic recalculation of the current and up to two preceding experience rating modifications. 

    The Statistical Plan – 2008 Edition, Rule 5-A-1, requires a correction report to be filed without delay when f. The claim, or any part thereof, is declared noncompensable as defined in Part 4, Item A-1-d—Noncompensable Claims.

Mod Revision due to Correction in Classification: Experience Rating Plan Manual Rule 4.B.3.We can reassign past payroll to the appropriate classification code and rating values under several circumstances. We will not revise a mod if the class change is a result of a change in the insured’s operations, or a rule change in the classification system (for example, a new code established).