WC & EL / PART ONE / RULE VI:

1. Definition

   The carrier approved rate for each classification is derived by multiplying the approved loss cost by the carrier specific loss cost multiplier (LCM) approved by the New York State Department of Financial Services.

   The carrier approved rate for a given classification is the charge for each $100 of remuneration.

   Exceptions: The premium for all classifications is determined on the basis of remuneration except for the following:

   Classification	Premium Basis
   Domestic Workers Codes 0908, 0909, 0912, 0913	Per Capita
   Building Operations Code 9027	Per Location
   Volunteer Firefighters
   Code 7711	Population
   Code 7716	Per Policy
   Volunteer Ambulance Service Company Code 7370	Per Ambulance

    

2. Carrier Approved Rate Components

   Each carrier approved rate is comprised of a Loss Cost and a Loss Cost Multiplier.

   1. Loss Cost

      The loss cost is the portion of Workers’ Compensation Insurance rates intended to represent the anticipated costs of claim payments and loss adjustment expenses associated with such claim payments, and may include one or more trend factors.  Loss costs do not include provisions for expenses (other than loss adjustment expenses) such as acquisition costs, overhead and taxes, or profit, but reflect industry-wide losses and directly related expenses.

      The loss costs published in this Manual are promulgated by the Rating Board and approved by the Superintendent of the New York State Department of Financial Services.

   2. Loss Cost Multiplier (LCM)

      The Loss Cost Multiplier is a factor, including a carrier’s expenses relating to Workers’ Compensation Insurance, by which the carrier adjusts, via multiplication, the approved loss costs to arrive at its filed rates.

      The LCM may include a Loss Cost Modifier which is an adjustment to the approved loss costs that represents a carrier’s own loss and loss adjustment expense experience.

      Each carrier must separately file its LCM with the Superintendent of New York State Department of Financial Services for approval.  All approved loss cost multipliers are listed on the Department’s website www.dfs.ny.gov or can be found at www.nycirb.org.

3. Show Carrier Approved Rate in Item 4. of the “Information Page” (WC 00 00 01 A)

   For each classification shown in Item 4., the carrier’s approved rate shall be stated in the column named “Rate per $100 of Remuneration.”

4. Non-Ratable Elements

   Non-ratable elements are charges that are based on catastrophic type exposures and are thus excluded from ordinary ratemaking and are also not subject to experience rating and retrospective rating.

   A separate statistical code is assigned for each non-ratable element.  This Statistical Code and corresponding charge are applied in addition to the basic classification when determining premium.

   Refer to the “Loss Costs” pages in Part Three – Loss Costs of this Manual for class codes designated with an “N” that are part of a ratable/non-ratable group.  The footnotes provide the separate statistical code for each non-ratable element to reflect the non-ratable catastrophe loading.

Premium for each classification shown in the policy is determined by multiplying the basis of premium by the carrier approved rate.

All premiums should be shown to the nearest dollar. A remainder of $.50 or more shall be rounded to the next higher dollar.

1. Explanation

   The Expense Constant is a premium charge which applies to every policy.  It covers expenses such as those for issuing, recording, and auditing, which are common to all workers’ compensation policies regardless of premium size.

2. Amount

   The Expense Constant is the carrier’s approved expense constant as shown on the Information Page.  Refer to Rule IX for the Expense Constant charge on a canceled policy, Rule X for the Expense Constant on a long-term policy, and to Rule XIII for Expense Constant on a policy that insures only domestic workers of this Manual.

   For multi-state policies, allocate the expense constant to the state with the highest applicable expense constant.  If two or more states have the same highest expense constant, allocate it to the state developing the highest standard premium.

   Full expense constant must be charged for short-term policies.  

   Exceptions:

   Expense constant is prorated when short-term policies are issued:
   1. To replace a binder; or
   2. Solely to establish consistent effective dates with other insurance policies.

   Note: The expense constant shall not be prorated because of any change in operations during the term of the policy.

   The expense constant charged at the inception of the policy will not change when a state is added or deleted during the policy term.

3. Premium Discount, Experience Rating, Retrospective Rating, and Terrorism Charge

   The Expense Constant is not subject to premium discount, experience rating modification, retrospective rating adjustment, or the additional charge for the Terrorism Risk Insurance Program Reauthorization Act of 2019.

4. Minimum Premium

   The Expense Constant is included in the carrier’s minimum premium for each classification and shall not be added if the carrier’s minimum premium becomes the final premium for the policy.

5. Information Page

   The Expense Constant shall be shown on the Information Page.

1. Explanation

   The minimum premium is the carrier’s minimum premium and the lowest premium amount required to provide insurance under the Standard Policy. The minimum premium shall be stated on the Information Page on an estimated basis. It is the lowest total policy premium for a policy period not longer than one year. Refer to Rule X of this Manual for Three-Year Fixed Rate Policies.

2. How Determined

   The minimum premium for a policy shall be determined as follows:

   1. For a policy with only one classification, apply the carrier’s minimum premium for that classification.
   2. For a policy with two or more classifications, apply the carrier’s highest minimum premium for any classification shown on the policy.
      
      

      Full minimum premiums are charged for short-term policies, subject to the following:

      The minimum premium is prorated when:

      1. A short-term policy is issued to replace a binder; or
      2. short-term policy is issued to establish consistent effective dates with other insurance policies.

   Note: The carrier’s minimum premium shall not be prorated because of any change in operations during the term of the policy.  This charge is adjusted based on the actual premium developed for the policy period at the time of audit.

3. Experience Rating

   The minimum premium is determined after the application of the experience rating modification factor.

4. Adjustment Upon Audit

   The carrier’s minimum premium is subject to final adjustment and shall be determined upon audit, based on those classifications that developed the premium.  If the final earned premium is less than the carrier’s minimum premium determined upon audit, that minimum premium shall be charged.  If no classification develops premium, the premium charged shall be the carrier’s minimum premium of the code with the highest minimum premium applicable to the business of the employer.  For canceled policies, refer to Rule IX of this Manual.

5. Special Minimum Premium Requirements
   1. For increased limits of employers’ liability on a Standard Policy, refer to Rule VII of this Manual.
   2. For admiralty or federal employments, refer to Rule XII of this Manual.
   3. For domestic workers, refer to Rule XIII of this Manual.
6. Employers’ Liability Policies

   For a policy providing only employers’ liability insurance with increased limits, the carrier’s minimum premium shall be increased by the factor that applies to the rate(s) for that policy. Refer to Rule VII of this Manual.

7. Multiple State Policies

   For a multiple state policy, the applicable minimum premium for the policy would be that of the state with the single highest minimum premium, even if that state is on an “if any” basis. If two or more states have the same highest minimum premium, the minimum premium is determined by the state with the largest amount of standard premium.

8. Premium Charges Applicable to Policies for Which No New York Exposure Is Developed

   The following rules govern the determination of premium in the case of policies for which no New York premium is developed upon audit:

   1. If no New York remuneration develops upon audit for a multistate policy, and the earned premium for other states exceeds the carrier’s New York minimum premium for the code with the highest minimum premium applicable to the business of the employer, no carrier expense constant or carrier minimum premium for New York is charged.
   2. If no New York remuneration develops upon audit for a multistate policy, and the earned premium for other states is less than the carrier’s New York minimum premium for the code with the highest minimum premium applicable to the business of the employer, the minimum premium for the code with the highest minimum premium applicable to the business of the employer is charged for the policy.  The New York premium is the difference between the carrier’s minimum premium for the code with the highest minimum premium applicable to the business of the employer and the earned premium for the other states.  The premium assigned to New York is considered the carrier’s expense constant premium and shall not be greater than the expense constant premium for New York.
   3. If under conditions (a) and (b) above, New York coverage is provided by endorsement for only part of the policy period, the pro rata portion of the carrier’s expense constant and the carrier’s minimum premium for the code with the highest minimum premium applicable to the business of the employer shall be used in applying the above rules.

1. Definitions
   1. Standard Premium

      Standard premium is determined based on carrier approved rates, any experience rating modification, New York Construction Classification Premium Adjustment Program credits, surcharges and credits under the Workplace Safety Programs, New York Safe Patient Handling Act Program (NYSPHAP), other programs as shown in the Premium Algorithm, non-ratable elements, premium for increased limits of liability, and carrier minimum premiums.

      Premium discount, expense constant, New York State Assessment, Workers’ Compensation Security Fund Surcharge, and the charges for terrorism, natural disasters, and catastrophic industrial accidents as shown in Rule VIII of this Manual, shall be excluded from determination of the standard premium.

   2. Total Standard Premium

      Total standard premium is the sum of standard premium for all states covered by the policy.

Premium discount recognizes that the relative expense of issuing and servicing larger premium policies is less than for smaller premium policies.

Premium discount is a per policy premium credit calculated based upon the carrier’s expense provision as of the effective date of the policy and policy standard premium.

If a policy develops total standard premium of more than $5,000, the standard premium is subject to premium discount in the following ways:

1. Without Retrospective Rating
   1. Single State Policy

      If a policy provides coverage only in New York, the carrier shall apply a premium discount as approved by the New York State Department of Financial Services.

   2. Multiple State Policy

      If premium discount applies on a multistate policy, methods of computing premium discount are determined and defined within the carrier’s filing.

2. With Retrospective Rating

   The portion of standard premium subject to a retrospective rating plan is not subject to premium discount.  The remainder of that standard premium is subject to premium discount, which shall be computed as follows:

   1. Determine the discount as if none of the premium is subject to retrospective
   2. Determine the discount based on only that premium which is subject to retrospective rating;
   3. The difference between (a) and (b) above is the premium discount.
      
      

      The total premium discount shall be distributed by state in proportion to the standard premium which is subject to premium discount.

3. Combination of Policies

   Two or more policies issued to the same employer by one or more insurance carriers under the same management shall, unless the employer instructs the carrier otherwise, be combined for purposes of computing the premium discount for that employer.

   If the separate policies have different expiration dates, the combination for the above is subject to the following:

   1. The Rating Board shall determine the effective date for the application of premium discount.
   2. All such policies in force prior to such effective date shall be canceled and rewritten as of the effective date.
   3. All policies effective after the effective date of the combination shall be written to expire concurrently with other policies in the combination.

A deposit premium may be payable at the inception of the policy and shall not be less than the minimum premium stated in the policy.

If the employer is subject to experience rating, the experience rating modification shall be shown in Item 4. of the Information Page and applied to the premium in accordance with the New York Experience Rating Plan Manual.

The rules and classifications in this Manual govern the audit of remunerations and adjustments of premiums, subject to the following requirements:

1. The carrier shall conduct a physical audit, whether at the employer’s location or at a remote site, of the employer’s records to determine the premium subject to the following:
   
   1. Each employer producing an annual premium of $10,000 or more shall be audited at least once a year.
   2. Except as provided in (c) below, each employer producing an annual premium of less than $10,000 shall be audited the first year a policy is written by a carrier, then at least once every three years thereafter.  In each year when a physical audit is not conducted, a signed payroll statement shall be obtained from the employer.
   3. In instances where an audit is clearly impracticable, such as for private residences or building operations served by one or two employees, an actual audit may be waived and a signed payroll statement from the employer may be accepted.
      
2. The auditor shall complete an audit report directly from the books of account and original payroll records (in either electronic or hard copy form) of the employer.  In every instance, audited information shall coincide with the policy effective and expiration dates.  Reasonable deviations from this standard that do not affect the earned premium are permitted to coordinate the audit with the first of the nearest month.  On policies subject to monthly, quarterly, or semi-annual audit, the Deposit Premium shall be determined and paid in accordance with Section (G) of this Rule.  The carrier shall then:
   
   1. Charge premium for each interim period as well as for the final period on the basis of actual audits; or
   2. Charge premium for each interim period on the basis of signed payroll statements from the employer; or
   3. Charge the balance of the estimated annual premium on the basis of equal interim payments which aggregate such balance.

   Note: Maintenance of Records

   The words “are maintained,” as used in this Manual, mean the books and records used in the premium verification shall be the same books and records that were maintained during the policy period being audited.  If the books and the records were revised for auditing purposes, the employer is not entitled to any exclusions of remuneration for the policy period(s) being audited.

3. For construction employers subject to the provisions of Rule V Section (G) of this Manual, a carrier may enter into agreement with the New York State Department of Taxation and Finance (“DTF”) for the purpose of verifying an employer’s remuneration records. Note that this verification is limited to a representation by DTF that the employer’s remuneration information, submitted to DTF by the carrier, is either overstated or understated.

Employers subject to Rule V Section (G) of this Manual shall have their manual premiums adjusted to reflect payroll limitation in the following manner:

1. Limited payroll, as determined in accordance with Rule V Section (G) of this Manual, will be applied to the published or authorized carrier approved rate for each applicable construction classification(s) to determine the manual premium.
2. A territory differential shall be applied to each portion of the manual premium corresponding to the geographic territory in which work has actually been performed. Refer to the “Miscellaneous Values” pages in Part Three - Loss Costs of this Manual for the geographic territory definitions and differentials.

   Note: Territory differentials are not to be applied to premiums determined from employments engaged in the construction of one or two-family residential housing as defined in Rule V Section (G)(1) of this Manual.

3. Both manual premium(s) and territory differential premium(s) are subject to experience rating.  The differential premium is to be reported to the Rating Board under the following statistical codes:

   Territory 1 Differential Premium – Code 9126
   Territory 2 Differential Premium – Code 9127
   Territory 3 Differential Premium – Code 9128

Refer to Rules XI and XII of this Manual for information on procedures for insurance for employers subject to the U.S. Longshore and Harbor Workers’ Act, The Federal Employers’ Liability Act and Admiralty Law.

1. Actual Remuneration

   Final earned premium for the policy shall be determined based on actual, instead of estimated remuneration or other premium bases.

2. Premium Determination

   The determination of final earned premium is governed by rules and classifications in this Manual, subject to modification by applicable Rating Plans.  Carriers shall also refer to their filed and approved rates as instructed and noted throughout this Manual for premium determination.

3. Audit Rights of Carrier

   The insurance carrier has the right to compute earned premium based on an examination of original remuneration records and books of account of the employer, in accordance with Part Five - Premium of the Standard Policy.

1. General Explanation

   A wrap-up construction project is a large construction, erection or demolition project for which policies have been issued by one or more insurance carriers under the same management to insure two or more legal entities engaged in such project.

   Separate policies shall be issued to each eligible entity involved in a wrap-up construction project unless combination is permitted under Rule III Section (B)(1) of this Manual.

   Note: “Wrap-up” must be indicated on the policy reported to the Rating Board.   

2. Application of Premium Discount Rule

   The following application of the premium discount is optional for wrap-up construction projects which are not under a Retrospective Rating Plan.

   Policies issued to two or more legal entities engaged in a construction, erection or demolition project may be combined for the purpose of computing premium discount, subject to the following conditions:

   1. Insurance Carrier

      All such policies shall be issued by one or more insurance carriers under the same management.

   2. Policy Limitation

      The policies shall be limited to insurance on such wrap-up construction projects by attaching the “Designated Workplaces Exclusion Endorsement” (WC 00 03 02).

      Note: Also attach the “Designated Workplaces Exclusion Endorsement” (WC 00 03 02) to exclude wrap-up construction projects from coverage under other policies issued to entities covered under the wrap-up by attaching that endorsement to such other policies.

   3. Eligible Entities

      Entities eligible for combination shall be limited to the general contractor (including any owner or principal acting as a general contractor) and subcontractors performing work under contracts let on an ex-insurance basis.  In addition, if the contract between the owner or principal and the general contractor is on an ex-insurance basis, the owner or principal shall be an eligible entity under this Rule.  Ex-insurance basis refers to contracts where the cost of insurance is excluded from bids.

   4. Premium Requirement

      Estimated total standard premium for the project to be done by the combined entities shall be $500,000 or more.

   5. Location Requirement

      The project shall be confined to operations at a single location.  In connection with the building of roadways, tunnels, waterways, surface or underground conduits, or New York City school construction work specifically authorized by the New York City School Construction Authority Act, the entire job or sections of the job shall be considered a single location if the construction is performed by a single general contractor for a single owner or principal.

   6. Duration Requirement

      The project shall be of definite duration involving work to be performed continuously to completion.

1. Definition of Modified Premium

   Modified premium, for the purpose of this Rule, is premium determined on the basis of carrier rates authorized by the New York State Department of Financial Services, and any experience rating modification or merit rating factor.

2. Compulsory Workplace Safety and Loss Consultation Program (Code Rule 59) Premium Surcharge

   The premium surcharge applicable to employers subject to Section 134 of the Workers’ Compensation Law and New York State Department of Labor Code Rule 59 shall be determined as follows:

   The premium surcharge imposed on an employer for failure to initiate a safety program or implement the recommendations of a certified loss consultant shall be a 5% charge applied to modified premium as defined in (1) above.  The premium surcharge is not subject to experience rating and is to be reported to the Rating Board under Statistical Code 9747 “Workplace Safety – Loss Consultation Premium Surcharge,”  Code Rule 59 can be found at: NYDOL Code Rule 59 Regulations.

   Note: An additional 5% charge shall be made in each successive year of non-compliance e.g., 5% in the first year; 10% in the second year; 15% in the third year, etc.)

3. Workplace Safety and Loss Prevention Incentive Program (WCL Section 134 and Code Rule 60)

   The Workplace Safety and Loss Prevention Incentive Program (“WSLPIP”) is a program administered by the New York State Department of Labor that grants premium credits as set forth by the New York State Department of Financial Services. WSLPIP eligibility rules and application can be found at NYDOL Code Rule 60 Regulations.

   For each policy of workers’ compensation insurance issued or renewed in the state, a carrier shall provide credit to an employer that implements and maintains one or more of the following programs, which meets the requirement of Industrial Code Rule 60:

   1. Safety Incentive Program – For those employers with an approved safety incentive program that meets the requirements of Industrial Code Rule 60, the credit shall be:
      
      1. four percent in the first full year in which the employers are entitled to a credit; and
      2. two percent in each consecutive full year thereafter.

      The premium credit to qualified employers for the implementation of an approved safety incentive program shall be applied to the modified premium as defined in (1) above.  The premium credit is not subject to experience rating and is to be reported to the Rating Board under Statistical Code 9748 “Safety Incentive Program Premium Credit - WSLPIP.”

      Note: An employer subject to the Compulsory Workplace Safety and Loss Consultation Program (Code Rule 59) is not eligible for this credit unless the employer completely fulfills the requirements of the compulsory program, meets the WSLPIP (Code Rule 60) eligibility criteria and obtains approval of a safety incentive program.

   2. Drug and Alcohol Prevention Program – For those employers with an approved drug and alcohol prevention program that meets the requirements of Industrial Code Rule 60, the credit shall be two percent in every full year for which the employers are entitled to a credit.

      The premium credit as a result of a qualified employer implementing an approved drug and alcohol prevention program is applied to modified premium as defined in (1) above. The premium credit is not subject to experience rating and is to be reported to the Rating Board under Statistical Code 9753 “Drug & Alcohol Prevention Program Premium Credit - WSLPIP.”

   3. Return to Work Program – For those employers with an approved return to work program that meets the requirements of Industrial Code Rule 60, the credit shall be:
      1. four percent in the first full year for which the employers are entitled to a credit; and
      2. two percent in each consecutive full year thereafter.

         The premium credit as a result of a qualified employer implementing an approved return to work program is applied to modified premium as defined in (1) above.  The premium credit is not subject to experience rating and is to be reported to the Rating Board under Statistical Code 9743 “Return to Work Program Premium Credit.”

4. New York Safe Patient Handling Act Program (NYSPHAP)

   The NYSPHAP applies to health care facilities, as defined by Section 2997-h(1) of the New York State Public Health Law, that are in compliance with the provisions of the New York State Safe Patient Handling Act, codified in Article 29-D, Title 1-A of the New York State Public Health Law (“Safe Patient Handling Act”), which can be found at: Safe Patient Handling Act

   Classifications that are eligible to receive a credit under the NYSPHAP may include, but are not limited to, the following classes:

   Classification	Phraseology
   8829	Nursing Home – All Employees
   8833	Hospital – Professional Employees
   8865	Alcohol or Drug Rehabilitation Facility – All Employees & Clerical
   8866	Assisted Living Facility – All Employees & Clerical
   9040	Hospital – All Other Employees

   Mandatory requirements for compliance with NYSPHAP are enumerated in Section 2997-k(2) of the New York State Public Health Law. In accordance with New York State Insurance Regulation 119, 11 NYCRR 151–7.2(b), insurers shall verify compliance with the Safe Patient Handling Act. Health care facilities that are in compliance will receive a credit as follows:

   1. A flat 2.5% credit (“Flat Credit”); or
   2. A tiered credit in accordance with the following table (“Tiered Credit”):
   
   

   Percentage of Policy Premium Subject to NYSPHAP	% Credit
   95% or more	2.5
   Greater than or equal to 70%, but less than 95%	2
   Greater than or equal to 35% but less than 70%	1.25
   Greater than or equal to 10% but less than 35%	0.5
   Less than 10%	0.1

   Each carrier group shall choose one credit methodology – either the Flat Credit or the Tiered Credit – which will be applied by each of its carrier members to all of its eligible employers. To the extent that a carrier is not a member of a carrier group, that carrier shall similarly choose one credit methodology which it shall apply to all of its eligible insureds. Unless a carrier group, or a carrier that is not a member of a group, provides notice to the New York State Department of Financial Services that it will apply the Tiered Credit, such group or carrier shall apply the Flat Credit.

   NYSPHAP credit applies to the entire modified policy premium and is to be reported to the Rating Board under Statistical Code 9651 “Safe Patient Handling Program Premium.”

   The NYSPHAP credit shall be applied at policy inception and is subject to premium audit.

   The following endorsements are to be used:

   1. New York State Safe Patient Handling Act Program Explanatory Endorsement (Flat Credit) (WC 31 04 05 A) is used to reflect the flat credit methodology.
   2. New York State Safe Patient Handling Act Program Explanatory Endorsement (Tiered Credit) (WC 31 04 06 A) is used to reflect the tiered credit methodology.
      
5. New York Schedule Rating Plan
   
   1. Eligibility

      To be eligible for this Plan, which is applied on an optional basis by the carrier, the annual manual premium shall be $2,500 or greater.

   2. Application
      1. The maximum schedule rating modification adjustment is limited to plus or minus 5% and is exclusive of any other approved New York credit or debit programs, such as the Workplace Safety and Loss Prevention Incentive Programs (i.e. Safety Incentive Program, Drug and Alcohol Prevention Program, and Return to Work Program), the New York Safe Patient Handling Act Program (NYSPHAP), and Compulsory Workplace Safety and Loss Consultation Program. Credits derived from the NYCCPAP or Deductible Program are also exclusive of a schedule rating plan.
      2. The schedule rating factor is applied in a multiplicative manner after the application of the merit rating factor (if applicable) or the experience rating factor (if applicable) and before the application of premium discount and the expense constant.
      3. The credit or debit shall be in the range for each specific risk characteristic as provided in the Plan.
      4. Schedule rating plans shall provide for an objective analysis of the risk and be based on factual information that supports the rating. Schedule rating plans shall be based only on rating characteristics not already reflected in the carrier rates, experience modification, or any other program. Schedule rating plans should not include debits or credits to reflect past loss experience.
      5. At the time that the schedule rating factor is applied, the carrier shall have documentation on file detailing the basis for the credit or debit. The New York Schedule Rating Worksheet shown below is provided for your use and information. Carrier documentation shall be provided to the employer upon request.
      6. The effective date of the schedule rating factor shall be on or after the date of the carrier’s receipt of the documentation supporting the basis for the schedule rating factor.
      7. If the employer can correct the reason for any schedule debit to the satisfaction of the carrier, the debit may be removed effective on the date that documentation for the correction is received in the carrier’s office.
      8. Schedule rating credits may not be awarded for any safety feature for which any credit, discount or dividend was already provided under an approved Safety Group program.
      9. New York schedule rating credit or debit applies to the entire modified policy premium and is to be reported to the Rating Board under Statistical Codes 9887 “Schedule Rating Credit” and 9889 “Schedule Rating Debit.”
         
   3. Schedule Rating Table

      The premium for an employer may be modified according to the Schedule Rating Table to reflect such risk characteristics that are not reflected in its experience. Seven categories may be considered when determining the schedule rating factor. The examples of risk characteristics shown in the table are indicative of each category but are not inclusive of all items to be considered and may be used to help evaluate the proper credit or debit to be assigned.

The following algorithm provides an outline of the sequence and calculation procedures for determining New York workers’ compensation policy premiums.