NCCI eliminates anniversary rating date

NCCI’s elimination of the anniversary rating date (ARD) will result in a rule change: The ARD, which is currently the date used to apply the rules, classifications, and rates to a policy, will be replaced with the policy effective date (PED).

This change will apply to all new and renewing policies effective May 1, 2017. The benefits of this change are:

• Simplicity of always using the PED regardless of short-term policies, gaps in coverage, and ownership changes
• Uniformity with other types of insurance as well as other states that do not currently use an ARD for workers’ compensation insurance

While this is a big change, ARD’s replacement by PED should have little impact because 90 percent or more of SAIF’s policies have matching dates. For those that have differing dates, the transition to the use of a PED will be seamless.

The biggest impact will be for ownership and combination changes that result in varying policy effective dates for combination members. This is because some of NCCI’s rules apply per combination instead of per policy. They are:

• Premium discount
• Executive officer minimum and maximum wage values
• Retrospective rating plan factors (when combined on the same plan)
• Assigned risk loss-sensitive rating plan factors (assigned risk’s retrospective rating plan)

Which PED will control?

If there are different PEDs for combinations of entities, the following rules will determine which PED will apply:

• Adding a new policy to an existing combination: The existing combination’s PED will control.
• Combining a new policy with an existing policy: The existing policy's PED will control.
• Creating a combination due to an ownership change: Use the earliest PED of the policies being combined.

You should also keep in mind differing PEDs for combination members can also produce differing class rates depending on the calendar year of the PEDs. This is because rate filings vary by calendar year.

As a reminder, ARD elimination has no impact on the rating effective date (RED) used to apply experience rating modification, OGSERP, claim, and merit rating factors to a policy. It also has no impact on when we assess short-rate penalties.

We know change can be hard and we’re here to help. You can email ARD elimination questions to UWARDResource@saif.com.