Notice is hereby given that the Commissioner of Insurance has entered Commissioner´s Order No. 98-0998 dated August 27, 1998, which adopted revised Texas workers' compensation classification relativities (classification relativities) and revised expected loss rates and discount ratios contained in the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (the Manual).
The Commissioner determined through the public hearing held on August 18, 1998, that the revisions to the classification relativities and the revisions to the expected loss rates and discount ratios contained in the Manual are necessary to more accurately reflect the changes in experience due to enactment of legislation as well as changes that occur with the passage of time due to occurrences, such as technological advances and improvement in safety programs. The Commissioner also determined that the Texas Department of Insurance (TDI) staff should review, and revise if necessary, the classification relativities and the expected loss rates and discount ratios on an annual basis to ensure that they reflect the experience in Texas as accurately as possible.
All insurance companies must either use the revised classification relativities adopted by the Commissioner´s Order No. 98-0998 or file their own individually developed company specific relativities for all workers' compensation policies written with an effective date on and after January 1, 1999. In other words, for policies with an effective date on and after January 1, 1999, insurance companies may no longer use the January 1, 1997 relativities as the basis of rates. All rates must be based either on the January 1, 1999 relativities or on company specific relativities that have been filed with TDI.
Insurance companies may use the new relativities prior to January 1, 1999, provided a filing is made with TDI on or before their selected effective date. If an insurance company files new rates and issues a policy prior to January 1, 1999 using a code that is being combined into another code as of that date, the rate for that code will be based on the January 1, 1999 relativity for the surviving code.
The revised expected loss rates and discount ratios must be used to calculate an experience modifier with an effective date on or after January 1, 1999. They may not be used to calculate an experience modifier with an effective date prior to January 1, 1999.
A Commissioner´s Bulletin will be issued prior to the end of September detailing the filing options and procedures necessary to adopt the new workers' compensation relativities. It is recommended that insurance companies not make a filing to adopt the new relativities until this bulletin has been received.
For further information or questions in regard to the revised classification relativities, expected loss rates and discount ratios, please contact Philip Presley, Chief Actuary for Property and Casualty Insurance at 512-475-3017.
Sincerely,
Nancy Moore
Deputy Commissioner, Workers' Compensation
Mail Code 105-2A
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