Experience Modification Factors

Experience modification factors - Notification of employers - Failure to give timely notification.

If the experience modification factor notification is not received by the employer prior to the policy renewal date, or the policy anniversary date if different, the experience modification factor shall not be used for premium purposes if its use results in a higher premium for the employer.  The mailing of the experience modification factor worksheet shall be sufficient proof of notice, provided such mailing is by certified mail, return receipt requested.

This law means that unless the employer receives the experience modification worksheet by registered mail, return receipt requested, prior to the renewal date the company cannot use the late factor to increase the employers WC premium.  The law became effective upon its passage May 31, 2000.  It applies to both voluntary and assigned risk business.

This is a two part law.  Part (a) requires that the experience modification worksheet be sent to the employer at no charge, and part (b) requires that it be sent certified mail, return receipt requested.  While the law does not specify who will send the worksheet the NCCI rule says the NCCI will send the worksheet via certified mail, return receipt requested. Part (b) also says the mod may not be used if it goes up and "is not received by the employer prior to the policy renewal date, or the policy anniversary date if different".  You may encounter carriers that say the law allows late mods to be used when it is new business to the company.  The NCCI rule makes it clear that the mod notification applies to both new and renewal policies by stating "the modification shall not be applied if endorsed after the policy effective date, or anniversary rating date, if different than the policy effective date."

TCA § 50-6-414. Experience modification factors - Notification of employers - Failure to give timely notification.

(a)  Any employer who is assigned an experience modification factor for the purpose of determining its workers' compensation premium shall be sent annually, at no charge to the employer, a copy of any information relative to its experience modification factor that is available to an insurance company.

(b)  If the experience modification factor notification is not received by the employer prior to the policy renewal date, or the policy anniversary date if different, the experience modification factor shall not be used for premium purposes if its use results in a higher premium for the employer. The mailing of the experience modification factor worksheet shall be sufficient proof f notice, provided such mailing is by certified mail, return receipt requested.

The following are the NCCI exceptions for the law:

STATE RULE EXCEPTIONS
RULE 1-GENERAL EXPLANATIONS
D. ADMINISTRATION
Effective 01 Dec 2003

Change Rule 1-D-4 as follows:
4.      Any employer qualifying for an experience rating modification factor will receive a copy of its experience rating worksheet annually from NCCI, via certified mail, return receipt requested. There will be no charge to the employe
r for this service. The carrier of record and producer of record are provided access to the experience rating worksheet. Additional parties may be allowed access to the experience rating worksheet if authorized in writing by the employer.

RULE 4—APPLICATION AND REVISION OF EXPERIENCE RATING MODIFICATION
E. CHANGES IN EXPERIENCE RATING MODIFICATIONS

Change the Changes in Experience Rating Modifications Table of Rule 4-E as follows: