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ADOPTION OF AMENDMENTS TO THE TEXAS BASIC MANUAL OF RULES, CLASSIFICATIONS AND EXPERIENCE RATING PLAN FOR WORKERS´ COMPENSATION AND EMPLOYERS´ LIABILITY INSURANCE

The Commissioner of Insurance has adopted the amendments proposed by the Texas Department of Insurance (TDI) staff in a petition filed on February 24, 2003. Notice of the proposal (Reference No. W-0203-05-1) was published in the March 7, 2003 issue of the Texas Register 928 TexReg 21280. No hearing was requested on this matter. The Texas Department of Insurance received no comments concerning the proposed amendments.

The Commissioner adopted the amendments proposed by staff with one grammatical change to the proposed amendments as published in the Texas Register. The adopted amendments to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Worker´s Compensation and Employers´ Liability Insurance (the Manual), provides insurers licensed in Texas to write workers´ compensation insurance with the rules, classifications, endorsements, forms and experience rating plan applicable to Texas workers´ compensation policies. The purpose of these proposed amendments to the Manual is to set forth guidelines for implementation of the Terrorism Risk Insurance Act of 2002.

The adopted amendments to the Manual are as follows:

1. Amend Rule III E ­ Calculation of Total Estimated Policy Cost ­ Item 4 of the workers´ compensation policy to include the Terrorism Premium, if applicable, in the calculation of total estimated policy cost.

2. Amend Rule VI E Minimum Premium Number 5, Adjustment Upon Audit to indicate that if a policy is written on an "if any" basis, no Terrorism Premium will be charged unless the policy develops premium during the policy period or on audit.

3. Amend Rule VI I ­ Schedule Rating to provide that premium for the Terrorism Risk Insurance Act of 2002 is not subject to schedule rating.

4. Amend Rule VI to add Section J ­ Terrorism Premium pursuant to the Terrorism Risk Insurance Act of 2002 to provide that premium charged for losses covered under the Terrorism Risk Insurance Act of 2002 is based on the policy´s total payroll as defined by Rule V B, Remuneration ­ Payroll. The amendment further describes how the Terrorism premium should be determined, states that Terrorism premium is not subject to modifications, states that Terrorism premium is not included in standard premium, states that if a policy is written on an "if any" basis, no Terrorism premium will be charged unless the policy develops premium during the policy period or at audit and states that Terrorism premium does not apply to Code 0913.

5. Amend Rule VII B Premium Discount Number 1 to indicate that Terrorism Premium is excluded from determination of the standard premium.

6. Amend Rule XV D Domestic Workers Residences Number 2c to indicate that Terrorism Premium does not apply to Code 0913.

7. Amend Rule XVII ­ Premium Incentives for Small Employers to Section F indicate that Terrorism Premium is not subject to the premium incentive for small employers.

8. Amend Procedures A ­ Policy Issuance Number 6 to include Terrorism premium, if applicable, as item to be indicated on the Information Page of the policy.

9. Renumber Section XIV ­ Forms Applicable for Use In Connection With the Experience Rating Plan of the Experience Rating Plan to Section XV to accommodate adding a new Section XIV.

10. Add new Section XIV ­ Terrorism Premium pursuant to the Terrorism Risk Insurance Act of 2002 to the Experience Rating Plan to indicate that Terrorism Premium is not subject to experience rating.

The adopted amendments to the Manual are on file in the chief Clerk´s Office of the Texas Department of Insurance under Reference No. W-0203-05-1 and are incorporated by reference into Commissioner´s Order No.03-0273.

The Commissioner has jurisdiction of this matter pursuant to Articles 5.60 and 5.96 of the Texas Insurance Code.

IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the amendments proposed by staff to the Manual be and hereby are adopted.

IT IS FURTHER ORDERED that the proposed amendments to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers´ Compensation and Employers´ Liability Insurance will go into effect 15 days after notice of adoption is published in the Texas Register.




TEXAS WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY MANUAL
Effective

________________________________________________________________________________

RULES

TEXAS WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE

RULE III - POLICY PREPARATION - INSURED, POLICY PERIOD, STATE OF OPERATIONS and estimated policy cost

Items 1, 2, 3.A. and 4 of the Information Page

E. calculation of TOTAL ESTIMATED POLICY COST**-Item 4

1. ESTIMATED PAYROLL X RATE = ESTIMATED ANNUAL PREMIUM FOR CLASSIFICATION

2. + ESTIMATED PAYROLL X RATE = ESTIMATED ANNUAL PREMIUM FOR CLASSIFICATION

3. + ESTIMATED PAYROLL X RATE = ESTIMATED ANNUAL PREMIUM FOR CLASSIFICATION

4. + AIRCRAFT PASSENGER SEAT SURCHARGE, IF APPLICABLE

5. + PREMIUM CHARGE FOR WAIVER OF SUBROGATION, IF APPLICABLE

6 + PREMIUM FOR INCREASED LIMITS FOR EMPLOYERS' LIABILITY, IF APPLICABLE

7. ± PREMIUM INCENTIVE FOR SMALL EMPLOYERS, IF APPLICABLE

8. = ESTIMATED PREMIUM SUBJECT TO EXPERIENCE MODIFIER (1+2+3+4+5+6±7)

9. x EXPERIENCE MODIFIER (OR NEGOTIATED MODIFIER), IF APPLICABLE

10. = ESTIMATED MODIFIED PREMIUM (8x9)

11. x SCHEDULE RATING PLAN FACTOR, IF APPLICABLE

12. = ESTIMATED MODIFIED/SCHEDULE RATING PREMIUM (10x11)

13. - DEDUCTIBLE CREDIT, IF APPLICABLE Based on Estimated Modified/Schedule Rating Premium

14. + MINIMUM PREMIUM FOR L. & H.W., ADMIRALTY OR F.E.L.A. OPERATIONS, IF APPLICABLE

15. = ESTIMATED STANDARD PREMIUM (12-13+14)

16. - PREMIUM DISCOUNT, IF APPLICABLE Based on Estimated Standard Premium

17. + EXPENSE CONSTANT

18. + TERRORISM PREMIUM (TOTAL PAYROLL/100 x TERRORISM RATE), IF APPLICABLE

19.TOTAL ESTIMATED POLICY COST Excluding premium adjustments for retrospective rating plan and/or reimbursements for deductibles, if applicable (15-16+17+18)

** All workers´ compensation policies are subject to a final payroll audit that reflects the actual payroll and the actual premium developed on the policy in comparison to the estimated payrolls and the estimated premium and estimated policy cost calculated at the time the policy is issued.




Current Phraseology

RULE VI - RATES AND PREMIUM DETERMINATION

Item 4 of the Information Page

E. MINIMUM PREMIUM

5. Adjustment Upon Audit

The minimum premium is subject to final adjustment and shall be determined upon audit only on the basis of those classifications developing premium. If the final earned premium is less than the minimum premium determined upon audit, that minimum premium shall be charged. For cancelled policies, refer to Rule X. If no payroll is developed, use the minimum premium of Code 8810.


 

New Phraseology

RULE VI - RATES AND PREMIUM DETERMINATION

Item 4 of the Information Page

E. MINIMUM PREMIUM

5. Adjustment Upon Audit

The minimum premium is subject to final adjustment and shall be determined upon audit only on the basis of those classifications developing premium. If the final earned premium is less than the minimum premium determined upon audit, that minimum premium shall be charged. For cancelled policies, refer to Rule X. If no payroll is developed, use the minimum premium of Code 8810. If a policy is written on an "if any" basis, no premium will be charged for the Terrorism Risk Insurance Act of 2002, unless the policy develops premium during the policy term or at audit.


I. Schedule rating

Schedule rating is an optional rating plan that carriers may file which allows the carrier to deviate from their filed rates based on the individual characteristics of a risk. The schedule rating criteria and debits/credits are not standard between carriers.

All schedule ratings used in calculating premium must be supported by documentation maintained by the insurance company.


 

I. Schedule rating

Schedule rating is an optional rating plan that carriers may file which allows the carrier to deviate from their filed rates based on the individual characteristics of a risk. The schedule rating criteria and debits/credits are not standard between carriers.

All schedule ratings used in calculating premium must be supported by documentation maintained by the insurance company.


   

Premium for the Terrorism Risk Insurance Act of 2002 is not subject to schedule rating.


   

J. TERRORISM PREMIUM


   

The premium for the Terrorism Risk Insurance Act of 2002 is based on the policy´s total payroll as defined in Rule V-B. To determine this premium, the total Texas payroll for the risk is divided by $100 and then multiplied by the Terrorism rate filed with TDI by the insurance company. The calculation is expressed as (Payroll/100 x Terrorism Rate = Premium). This premium is then added to the Estimated Standard Premium, pursuant to Rule III-E. The terrorism premium is not subject to any modifications including, but not limited to, experience rating, schedule rating, retrospective rating, premium discount or premium incentive for small employers.


   

Premium developed under this Act is not included in standard premium.


   

Policies issued on an "if any" basis will not be charged a terrorism rate unless the policy develops premium during the policy term or at audit.


   

Premium for this Act does not apply to Code 0913 ­ Domestic Workers ­ Residences Per Capita Basis.


RULE VII - PREMIUM DISCOUNT

Item 4 of the Information Page


 

RULE VII - PREMIUM DISCOUNT

Item 4 of the Information Page


B. DEFINITIONS

1. Standard Premium

Standard premium means, for purposes of this rule, the Texas premium determined on the basis of the rates, any experience rating modification, schedule rating, deductible credit, and minimum premiums. The Expense Constant shall be excluded from determination of the standard premium.


 

B. DEFINITIONS

1. Standard Premium

Standard premium means, for purposes of this rule, the Texas premium determined on the basis of the rates, any experience rating modification, schedule rating, deductible credit, and minimum premiums. The Expense Constant and premium for the Terrorism Risk Insurance Act of 2002 shall be excluded from determination of the standard premium.


RULE XV - DOMESTIC WORKERS ­ RESIDENCES

D. RATES AND PREMIUM


 

RULE XV - DOMESTIC WORKERS ­ RESIDENCES

D. RATES AND PREMIUM


2. Premium

a. Premium for Code 0913 is determined on a per capita basis. Premium is calculated on the number of domestic workers during the policy period. If additional domestic workers are employed during the policy period or if some domestic workers leave employment and are not replaced, the per capita premium charges shall be pro rated.


 

2. Premium

a. Premium for Code 0913 is determined on a per capita basis. Premium is calculated on the number of domestic workers during the policy period. If additional domestic workers are employed during the policy period or if some domestic workers leave employment and are not replaced, the per capita premium charges shall be pro rated.


   

b. Premium for the Terrorism Risk Insurance Act of 2002 does not apply to Code 0913.


b. Premium for Code 0923 is determined on a payroll basis. Premium is calculated on the total payroll for domestic workers during the policy period.


 

c. Premium for Code 0923 is determined on a payroll basis. Premium is calculated on the total payroll for domestic workers during the policy period.


RULE XVII - PREMIUM INCENTIVES FOR SMALL EMPLOYERS


 

RULE XVII - PREMIUM INCENTIVES FOR SMALL EMPLOYERS


E. SHORT TERM OR CANCELLED POLICIES

If the policy is written for a period less than one year, or if the policy is cancelled prior to the expiration date, the premium shall be projected to an annual basis to determine eligibility for the premium incentive for small employers.


 

E. SHORT TERM OR CANCELLED POLICIES

If the policy is written for a period less than one year, or if the policy is cancelled prior to the expiration date, the premium shall be projected to an annual basis to determine eligibility for the premium incentive for small employers.


   

F. TERRORISM PREMIUM

Premium for the Terrorism Risk Insurance Act of 2002 is not subject to the premium incentive for small employers.


 

PROCEDURES

A. POLICY ISSUANCE


 

A. POLICY ISSUANCE


6. The information indicated on the Information Page of the policy shall be complete in all details:


 

6. The information indicated on the Information Page of the policy shall be complete in all details:


(q) Expense constant.


 

(q) Expense constant.


   

(r) Terrorism premium, if applicable.


(r) Total estimated policy cost.

(s) Minimum premium.

(t) Deposit premium.

(u) Signature or name of authorized Texas agent countersigning policy.


 

(s) Total estimated policy cost.

(t) Minimum premium.

(u) Deposit premium.

(v) Signature or name of authorized Texas agent countersigning policy.


TEXAS EXPERIENCE RATING PLAN

SECTION XIII- AIRCRAFT OPERATION - TRANSPORTATION

Special Procedure - Code 7421

The passenger seat surcharge in connection with Code 7421, which is reported under statistical Code 0088, is subject to modification by experience rating. However, exposure and losses reported under statistical Code 0088 shall be excluded from experience rating.


 

SECTION XIII- AIRCRAFT OPERATION - TRANSPORTATION

Special Procedure - Code 7421

The passenger seat surcharge in connection with Code 7421, which is reported under statistical Code 0088, is subject to modification by experience rating. However, exposure and losses reported under statistical Code 0088 shall be excluded from experience rating.


   

SECTION xiv- Terrorism Premium

Premium for the Terrorism Risk Insurance Act of 2002 is not subject to experience rating.


SECTION xiv- FORMS APPLICABLE FOR USE IN CONNECTION WITH THE EXPERIENCE RATING PLAN

The following forms are applicable for use in connection with this Plan:

ERM-1.2 Experience Rating Form

ERM-4.1 Accidents involving Two or More Persons

ERM-6A, 6B, 6C Report of Experience for Self Insurers

WC-RFI Request for Information


 

SECTION XV - FORMS APPLICABLE FOR USE IN CONNECTION WITH THE EXPERIENCE RATING PLAN

The following forms are applicable for use in connection with this Plan:

ERM-1.2 Experience Rating Form

ERM-4.1 Accidents involving Two or More Persons

ERM-6A, 6B, 6C Report of Experience for Self Insurers

WC-RFI Request for Information



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Archived File - for Reference Use

This file is historical in nature. Links and contact information may be outdated and no longer valid.


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Translation by WorldLingo


Translation by WorldLingo