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California Approves Experience Rating Changes Effective 1/1/2012

Monday, November 7, 2011
Written By
Kory Wells

In conjunction with the January 1, 2012, pure premium rate filing, the California Insurance Commissioner has approved changes to the experience rating method as mentioned in this previous article on the WorkCompEdge blog. The November 4th announcement, Bulletin 2011-09, says in part:

Beginning January 1, 2012, “Primary Credibility” and “Excess Credibility” factors will be substituted for “B” and “W” values in the experience rating formula and there will be significant changes to the appearance of the experience rating form and the manner in which the experience and rating computation are shown. The intent of these changes is to help policyholders better understand the experience rating formula and the data used in experience rating. The use of “Primary Credibility” and “Excess Credibility” in lieu of “B and W” values will not significantly impact 2012 experience modifications.

I know that’s short, but let’s recap:

  • What’s not significant:  The impact on 2012 mods. Mods will not change appreciably because of this change. In most circles, this will be known as the good news.
  • What is significant: The appearance and how we communicate about the mod calculation. An eternal optimist, I’m loathe to call this bad news, so I’m officially labeling this as the opportunity. And it is an opportunity, as the whole point of this change is to make communicating about the mod easier.

Here’s the complete regulatory filing summary from WCIRB. Be sure not to miss the WCIRB Quick Reference Guide listed on that page, as it includes an example of how the mod worksheet will look with the new factors in use.

For more about the credibility factors and how they will be used in the mod formula, see this WorkCompEdge article and this experience modification guide on the WCIRB site.

Calculating California Mods in ModMaster

Speaking of opportunities – our development team has already been hard at work making the necessary changes to support the move from ballast and weighting to credibility factors for California calculations 1/1/2012 and beyond. These changes will be available only in ModMaster 5.0. (This new web-based version has been in a staged roll-out for several weeks and should be available to all users by the middle of November.)

I’ll be writing more about this functionality – and how to communicate about the change using ModMaster reports – as soon as it’s available.

As a reminder, the Zywave Partner Service Center is available at [email protected] or 866.499.9283. And of course, I’m always interested in your comments and questions!

– Kory Wells, WorkCompEdge Blog Editor

© 2011 Zywave, Inc.  All rights reserved. For reprint permission, contact the blog editor.

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