If your company calculates California mods, please read this important notice.  

We want to make sure you are aware of pending changes in the California experience rating plan, and to ask if you can assist our ModMaster development and support staff in planning for those changes. 

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has submitted several changes to the workers compensation system effective January 1, 2006.  One change involves the experience rating system.  

The most significant change in the experience rating system will be the methodology used to split losses into primary and excess.  Currently, any claim that is $2,000 or less is allocated totally to primary.  Losses greater than $2,000 are split into primary and excess using a formula.  The new proposed methodology states that the first $10,000 of each claim will be primary and any amounts over $10,000 will be excess. 

As a result, the expected loss rates (ELR) and discount rates (D) will also be revised.  Along with these changes, the table of ballast and weighting values will be impacted. 

Over the past 15 years that we have provided ModMaster software, we have observed significant experience rating plan changes in other states.  We cannot emphasize enough how the impact on your client’s mod, from a change this significant, may be totally unpredictable.  You should prepare your clients for the possibility that their mods may change substantially. 

We have determined the necessary software changes to accommodate the new California formula in ModMaster, and we are prepared to make these changes quickly.  However, we are waiting on official notice of the proposed changes’ approval from the California Insurance Commissioner and WCIRB websites. As the January 1 date approaches, we are eager to keep abreast of the approval status and appreciate any information or bureau-calculated test cases our clients can share. Please contact Tim Coomer personally with any information or questions at TLC@specificsoftware.com or 800-929-4052 x 203.

Update: The proposed changes were rejected by the California insurance commissioner on November 10th, 2005. Updated rates effective 1/1/2006 for California are in ModMaster Update 05.11.