806 KAR 13:130. Experience modification factors for workers' compensation insurers

Link to law: http://www.lrc.ky.gov/kar/806/013/130.htm
Published: 2015

      806 KAR 13:130. Experience modification factors for

workers' compensation insurers.

 

      RELATES TO: KRS 304.13-011(9), 304.13-057,

304.13-091, 304.13-415

      STATUTORY AUTHORITY: KRS 304.13-415

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110

provides that the Executive Director of Insurance may make reasonable administrative

regulations necessary for or as an aid to the effectuation of any provision of

the Kentucky Insurance Code. KRS 304.13-415 requires that for each workers'

compensation policy issued or renewed on or after May 1, 1997, insurers or

licensed advisory organizations shall provide policyholders with written

explanations of the policyholders' experience modification factor and the data

and methodology utilized in the calculation of the factor. KRS 304.13-415 also

provides that the executive director shall establish guidelines for application of experience

modification factors to be used in developing workers' compensation insurance

rates. This administrative regulation establishes guidelines for the

application of experience modification factors, and for the written explanations

to policyholders regarding how the factors were calculated.

 

      Section 1. Workers' compensation insurers that use

experience modification factors shall develop an experience modification factor

for each insured in accordance with the following provisions:

      (1) The experience modification factor shall be

based upon three (3) full years of experience ending one (1) year prior to the

effective date of the modification;

      (2) The experience modification factor shall be

developed on an annual basis and shall remain effective for twelve (12) months;

      (3) Only one (1) experience modification shall

apply to a given risk at any time and shall apply to all operations of the

risk;

      (4) In developing premium for the experience

modification factor, insurers shall:

      (a) Apply the experience modification factor to the

carrier's rates in force on the effective date of the experience modification

factor; and

      (b) Base the premium upon state qualifying premium

amounts and the predetermined state limits, as both are identified in an

advisory organization's publications approved by the executive director; and

      (5) An experience modification factor may be

determined for a risk if the risk has developed sufficient qualifying premium

based on payroll and other exposures reported in accordance with the

publications of the National Council on Compensation Insurance.

 

      Section 2. Each insurer or advisory organization

using experience modification factors shall provide the policyholder with a

written explanation of the policyholder's experience modification factor in

language reasonably calculated to inform the policyholder of the data and

methodology utilized in the calculation of the factor, including the

information specified in Section 1 of this administrative regulation.

 

      Section 3. Incorporation by Reference. (1)

"Experience Rating Plan Manual for Workers Compensation and Employers

Liability Insurance", The National Council on Compensation Insurance, is

incorporated by reference.

      (2) This material may be inspected, copied or

obtained at the Kentucky Office of Insurance, 215 W. Main Street, Frankfort,

Kentucky 40602, Monday through Friday, 8 a.m. to 4:30 p.m. (24 Ky.R. 431; Am.

895; eff. 10-13-97; TAm eff. 8-9-2007.)
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