Insurers to adhere to uniform classification system, plan
This law is about how companies that sell workers' compensation insurance set their prices. All these insurance companies have to follow the same system for grouping jobs and rating risk, which is overseen by a state director. Insurance companies can adjust a customer's price up or down based on that specific employer's risk, but there are limits on how much they can change it. If an employer asks, the insurance company has to explain within 30 days what risk factors caused the price change, but the company does not have to share secret business information.
287.955. s to adhere to , plan — to , purpose, duties — risk plan, requirements. — 1. Every shall adhere to a uniform classification system and filed with the director by the advisory organization by the director and subject to his disapproval.
2. An insurer may develop subs of the uniform classification system upon which a rate may be made, except that such subclassifications shall be filed with the director thirty days prior to their use. The director shall disapprove subclassifications if the insurer fails to demonstrate that the data thereby produced can be reported consistent with the and .
3. The director shall designate an advisory organization to assist him in gathering, compiling and reporting relevant statistical . Every workers' compensation insurer shall and report its to the designated advisory organization as set forth in the uniform statistical plan approved by the director.
4. The designated advisory organization shall develop and file , subject to the approval of the director, reasonably related to the recording and reporting of data the uniform statistical plan, uniform experience rating plan, and the uniform classification system.
5. Every workers' compensation insurer shall adhere to the approved manual rules and in writing and reporting its business. No insurer shall agree with any other insurer or with the advisory organization to adhere to manual rules which are not reasonably related to the recording and reporting of data pursuant to the uniform classification system of the uniform statistical plan.
6. (1) A workers' compensation insurer may develop an which modifies premium based upon individual risk characteristics which are predictive of future loss. Such shall be filed thirty days prior to use and may be subject to disapproval by the director.
(2) (a) Premium modifications under this may be determined by an ing the individual risk characteristics and applying premium s and debits as specified under a . Alternatively, an insurer may utilize software or a computer designed to identify and assess individual risk characteristics and which systematically and ly applies premium modifications to employers. The rating plan shall establish objective standards for measuring variations in individual risks for hazards or expense or both. The rating plan shall not utilize factors which are duplicative of factors otherwise utilized in the development of rates or , including the uniform classification system and the uniform experience rating plan. No premium modification factors shall be based solely upon the geographic location of the employer.
(b) Premium modifications resulting from a schedule rating plan, with an underwriter determining individual risk characteristics, shall be limited to plus or minus twenty-five percent. Up to an additional ten percent credit may be given for a reduction in the insurer's expenses.
(c) Premium modifications resulting from a risk modeling system shall be limited to plus or minus fifty percent. Premium modifications resulting from a risk modeling system shall be reported separately under the uniform statistical plan from premium modifications resulting from a schedule rating plan.
(d) Changes in premium modification factors may occur if there is a change in the insurer, the insurer amends or withdraws the rating plan, or if there is a change in the employer's operations or risk characteristics underlying the premium modification factor.
(3) Within thirty days of a request, the insurer shall clearly disclose to the employer the individual risk characteristics which result in premium modifications. However, this disclosure shall not in any way require the to the insured employer of any or or data used to derive the premium modification and that meets the definitions of, and is protected by, the of chapter 417.
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Source & history notes
(L. 1993 S.B. 251 § 27, A.L. 2013 S.B. 1, A.L. 2016 H.B. 2194)
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