POA Decision – 1999/08/24-02 – Experience Rating
The Panel approved a new experience rating plan, which applies to all employers and independent operators. The primary goals are to improve equity for employers and create greater financial incentives for reducing claims and claim costs. To promote these goals, the new plan increases the maximum experience rating merit and demerit from 33 1/3% to 50% for discounts (merits) and 100% for surcharges (demerits). This will make employers more individually responsible for their compensation costs. The new plan also introduces other changes, such as a participation factor, which limits how much a firm’s assessment rate can change each year in response to changes in its cost experience, and per claim limits, which limit the impact of high cost claims on experience rating. The Panel’s resolution also requires the Board to develop and implement proposals to address claims avoidance activities and to provide rate modification programs that consider factors other than claims costs.
The Assessment Department has prepared an introduction of the new experience rating plan.