It is an entity that is part of the insurance portfolio of every employer in California: the Workers Compensation Insurance Rating Bureau (WCIRB). You may have heard about WCIRB from your broker, or the WCIRB may have been in contact with your business. How much do you really know about this agency?
What They Are
Every state has a way of assigning payroll classes, etc., much like the WCIRB. For the purposes of this article we are going to discuss the California WCIRB.
The WCIRB is a nonprofit association comprised of all companies licensed for workers compensation transactions in the State of California. The WCIRB works with the California Department of Insurance to perform many Workers Compensation Insurance related functions including:
- Using statistical and actuarial data to determine pure premium rates.
- Administering Workers Compensation regulations.
- Assist policyholders with employee classification.
- Produce and distribute experience modification factor worksheets.
- Reviews policy forms and endorsements.
- Advises the Cal-OSHA Targeted Inspection Program.
WCIRB serves workers compensation policyholders in many different ways, but the two most important ones for business owners are experience modification factors and employee classification codes. Here is how those work:
The Mod Factor
One way to modify pure premium on a work comp policy is through an experience modification factor. This factor is determined through a complicated mathematical process involving 5 years of claim data for a particular employer, including both frequency and severity of claims.
Depending on frequency (number of claims) and severity (claims amount paid out) a modification factor of anywhere from 60% to 300% may be applied to the pure premium to determine the total cost of the policy. These factors are calculated over three years and must meet a particular threshold for experience modification calculation (examples here).
The mod factor can have a huge impact on your premium. If you feel that your experience modification factor is in error, contact your insurance broker to have it recalculated. Mistakes do happen and can be corrected.
Employee Classification Codes
The backbone of workers compensation premiums is the employee classification codes. What your employees do at your place of business determines their classification codes, and each classification code is assigned an amount per $100 of payroll for premium. Lower risk employees, such as a secretary, have lower premiums. Higher risk employees, such as a roofer, have higher premiums. Your employee’s classification is determined by the amount of time he or she spends at certain activities, usually defaulting to the higher risk classification code.It can be difficult to determine what classification code under which some employees would be listed. If you feel your employees may be misclassified, the WCIRB may be able to help. Call your insurance broker to discuss your employee classifications and whether WCIRB should be contacted to make a classification determination.WCIRB wants to help employers make the most of their workers compensation insurance. With the help of your insurance broker, WCIRB can help you, too. Contact your broker today for a risk management analysis and to discuss your workers compensation insurance.