1. Cost-Plus Contracts
    Under a cost-plus contract, the principal agrees to compensate the contractor based on the cost of the work performed plus a fixed fee. A policy covering both contractor and the principal is:
  • Assigned the experience rating modification of the contractor
  • Included in the experience of the contractor
  1. Joint Ventures
    Two or more contractors, not combinable for experience rating under the rules of this Plan, may associate for the purpose of undertaking one or more projects as a joint venture.

    A joint venture may qualify for its own experience rating provided all of the following conditions are met:
  • The contract(s) for the participating entities is awarded in the name of the joint venture; and
  • The participating entities share the control, direction, and supervision of all work undertaken; and
  • The participating entities maintain a common bank account, payroll, and business records

    Note: The experience of the joint venture participants is excluded from the individual contractors' experience rating modifications.

Experience Rating Modification Determination

A joint venture... The experience rating modification is calculated...

Will not qualify for its own experience modification in the first year or two year(s) of operations(s)

By the carrier using:

  • An arithmetic average of the experience rating
    modifications of the participating entities
  • A unity (1.00) factor for a participating entity that
    does not have its own experience modification
     

May qualify for its own modification in the third and subsequent year(s) of operation(s)

By the Rating Board using the experience developed by the joint venture as reported to the Rating Board

  1. Uninsured Contractors
    The experience of an uninsured contractor and reported in accordance with the Statistical Plan is included in the experience of the primary contractor.

  2. Wrap-Up Construction Project
    A policy issued for an entity participating in a wrap-up construction project is subject to its own experience rating modification. (This also applies to an experience modification for a policy issued for two or more entities that are combinable under the rules of this Plan). Payroll and loss experience developed for all such policies, including wrap-up and non-wrap-up experience, is used in future experience rating modifications of the participating entities. There is no experience rating modification for wrap-up construction projects as a unit. Refer to the New York Workers Compensation and Employers Liability Manual for more information on wrap-up construction projects.

B. EMPLOYEE LEASING / PROFESSIONAL EMPLOYER ORGANIZATIONS

For the purpose of this Plan, employee leasing arrangements shall mean an arrangement whereby an entity contracts with another entity to lease some or all of its workers. The entity providing the workers shall be referred to as the labor contractor or Professional Employer Organization (PEO). The entity utilizing the workers shall be referred to as the client.

The payroll and loss experience of the client's leased and non-leased employees will be assigned to the client for experience rating purposes. 

Note: Any reference to the labor contractor as an additional insured in any manual rule or endorsement used for employee leasing purposes does not imply common ownership between the client and the labor contractor for experience rating.

When a client leaves an employee leasing arrangement, no special treatment for experience rating purposes is necessary since the experience of the client is routinely reported to the Rating Board in accordance with the Statistical Plan. 

C. EX-MEDICAL EXPERIENCE

If coverage is provided on an ex-medical basis as permitted by the rules of the New York Workers Compensation and Employers Liability Manual, the experience modification is calculated using the formula described in Rule 2-D-1 of this Plan, with the following exception:

Apply the ex-medical multiplier to convert the total expected losses for each classification to an ex-medical basis. The ex-medical multiplier is determined by the Rating Board using the following formula:

1.00 minus (1.30 x classification ex-medical ratio) 

Note: The total expected losses on a statutory (unadjusted) medical basis are used in determining the Ballast and Weighting values.

D. GROUP EXPERIENCE RATING PLAN FOR PUBLIC CORPORATIONS

  1. A group consisting of a county and any other public corporations (cities, towns, villages, districts, etc.), as defined in Article 5 of the New York Workers' Compensation Law, Section 32.2 of the Volunteer Firefighters' Benefit Law and Section 32.2 of the Volunteer Ambulance Workers' Benefit Law, may elect to be covered under a single policy. The group will be treated in all respects as a single risk for the purpose of experience rating, provided that the clerk of the board of supervisors of such county certifies to the Rating Board prior to the effective date of rates:
    1. The names of the county and other public corporations which have elected to become members of the group.
    2. The board of supervisors of the county and the governing board of each other participating public corporation have, by appropriate action, made such election and have agreed that all of their respective insurable employees shall be covered under a group policy for a period of one year after the effective date of the experience modification and under any renewal of such policy while said election continues in effect.
    3. That a named carrier has agreed to issue, and the group will accept and agree to be bound by the terms and conditions of, a single joint policy naming the county and each member of the group as co-insureds.
       
  2. The certificate filed with the Rating Board will be considered applicable to all future ratings unless a public corporation later withdraws its election. No public corporation may be newly admitted to the group after the effective date of and during any rating period, but it may be admitted for the following rating period provided its name is certified in accordance with the provisions of 1 above. The carrier must indicate to the Rating Board the names of all public corporations to be insured under a group policy prior to the development of a rating.

  3. Whenever such a group is established, the experience modification for any rating period shall be based upon the combined experience of all participating members for such rating period and shall be applied to each member for the whole period even though any member withdraws from the group.

    When a member withdraws from the group, its experience shall be removed from the group rating at the end of the term and shall be used in separately rating the withdrawn member.

  4. Any group established in accordance with these rules will be covered under a single policy naming the county and each public corporation as insureds.

E. MULTI-STATE EXPERIENCE RATING

A risk is eligible for experience rating on a multi-state (interstate) basis when it meets the requirements for intrastate rating and also develops experience during the experience period in one or more additional states where the Interstate Experience Rating Plan is effective. The National Council on Compensation Insurance is the data collection organization responsible for the calculation and verification of multi-state ratings.

F. NATIONAL DEFENSE PROJECT RATING PLAN: ATOMIC ENERGY

The experience modification is not applicable to the workers compensation premium resulting from operations under the National Defense Projects Rating Plan or Atomic Energy operations under the Nuclear Regulatory Authority. The exposure and losses are excluded from experience rating.

G. RATING TRANSITION PROGRAM

This program applies to insureds previously experience rated under certain classification codes that have been discontinued. The program is intended to minimize swings in experience modifications due solely to the elimination of a classification code(s). It does not apply to new risks or any other programs. The Rating Board will administer the transition program by adjusting the Expected Loss Rates (ELRs) for use in the rating calculation.

The ELR published in the manual may not apply to the calculation of an experience modification for an insured whose policy was previously subject to a discontinued code. For the first year after the elimination of a classification code, the ELR for an insured will be equal to a 4-1 weighting of the ELR used prior to the discontinuance of the code and the ELR for the new code. For the second year, a 3-2 weighting is used. A 2-3 weighting is used for the third year and a 1-4 weighting for the fourth year. The transition program does not apply after the fourth year.

Discount (D) ratios are not subject to this transition program.

The ELRs used in the following examples of the Rating Transition Program calculations are for illustrative purposes only.

CODE 3085 EXAMPLE 1

  Current Class
ELR
  New Class
ELR
  Transition
ELR
           
Year 1: 4 x 4.75 + 1 x 3.15    
 
= 4.43
  4 + 1    
           
Year 2: 3 x 4.75 + 2 x 3.31    
 
= 4.17
  3 + 2    
           
Year 3: 2 x 4.75 + 3 x 3.48    
 
= 3.99
  2 + 3    
           
Year 4: 1 x 4.75 + 4 x 3.65    
 
= 3.87
  1 + 4    
           
Year 5:   - 3.83 = 3.83
           
           

CODE 3270 EXAMPLE 2

  Current Individual
ELR
  Published
ELR
  Transition
ELR
           
Year 1: 4 x 1.65 + 1x 3.15    
 
= 1.95
  4 + 1    
           
Year 2: 3 x 1.65 + 2 x 3.31    
 
= 2.31
  3 + 2    
           
Year 3: 2 x 1.65 + 3 x 3.48    
 
= 2.75
  2 + 3    
           
Year 4: 1 x 1.65 + 4 x 3.65    
 
= 3.25
  1 + 4    
           
Year 5:   - 3.83 = 3.83
           
           

 

H. SEPARATE STATE EXPERIENCE RATING MODIFICATION

  1. Explanation
    A separate experience modification for New York in an interstate rated risk may be calculated. The New York experience rating modification is calculated using a weighted average, which is based on the risk's total expected losses in all states included in the interstate experience rating modification and its expected losses in New York.

  2. Permitted as Follows:
  1. The risk must be interstate rated.

  2. The risk must qualify for an intrastate rating in New York.

  3. The risk must qualify for an intrastate rating in at least one other state.

  4. The request for a separate state experience rating modification must be:
    • From a carrier licensed to write workers compensation insurance only in New York.•
    • In writing and with the written authorization of the insured. •
    • Received by the Rating Board prior to the rating effective date.
       
  5. The experience rating modifications determined by Steps A-C of Rule 5-I-4 are calculated using the experience rating modification formula and the cap on modifications.
  1. Application
  1. Any experience rating modification calculated under this rule applies for the full rating period, and applies to all applicable policies.

  2. The separate New York experience rating modification applies to all of a risk's operations in New York. The remaining interstate mod is applied to all other states.
  1. Determination of Separate State Experience Rating Modification
    The following step-by-step procedure is used to calculate the separate New York experience rating modification:

Step A - Calculate, on an interstate basis, an experience modification for the entire risk.
 
Step B - Calculate, on an intrastate basis, an experience modification for New York.

Step C - Calculate, on an interstate basis, an experience modification for all states excluding New York.

Step D - Calculate the following (using the results in Steps A, B, and C):

Step A x Total Expected Losses in All States


(Step B x Expected Losses in New York) + (Step C x Expected losses in All Other States)

Step E - Calculate the completed separate New York experience rating modification by multiplying the result in Step B by the result in Step D.

Step F - Calculate the completed experience rating modification for all other states by multiplying the result in Step C by the result in Step D.

I. UNITED STATES LONGSHORE AND HARBOR WORKERS COMPENSATION ACT COVERAGE

  1. Experience modifications containing classifications where the authorized rates include coverage under the USL&HW Act, are calculated using the formula described in Rule-2-D-1 of this Plan.

  2. Classifications subject to the USL&HW Act, but not followed by the letter "F" in the Table of Expected Loss Rates and Discount Ratios, have their expected losses determined by applying the USL&HW Act percentage in that table to the classifications' expected loss rates. The formula described in Rule-2-D-1 of this Plan will then apply.