Experience Rating / RULE 5
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 modification of the contractor
Included in the experience of the contractor
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 (are) 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’ modifications.
Experience Rating Modification Determination
A joint venture… The modification is calculated… Will not qualify for its own modification in the first year or two year(s) of operations(s) By the carrier using:
A weighted average of the modifications of the participating entities
- A unity (1.00) factor for a participating entity that does not have its own 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 Uninsured Contractors
The experience of an uninsured contractor must be reported in accordance with the Statistical Plan and will be included in the experience of the primary contractor.
Wrap-Up Construction Project
A policy issued for an entity participating in a wrap-up construction project is subject to its own modification. (This also applies to a 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 modifications of the participating entities. There is no modification for wrap-up construction projects as a unit. Refer to Rule VI Section (M) of the New York Workers’ Compensation and Employers’ Liability Manual for more information on wrap-up construction projects.
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 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 PEO 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 Professional Employer Organization (“PEO”) 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.
If coverage is provided on an exluding medical basis as permitted by the rules of the New York Workers’ Compensation and Employers’ Liability Manual, the modification is calculated using the formula described in Rule 2 Section (D)(1) of this Plan, with the following exception:
The expected losses for each classification are adjusted to reflect the excluding medical coverage.
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 State 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:
The names of the county and other public corporations which have elected to become members of the group.
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 modification and under any renewal of such policy while said election continues in effect.
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.
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.
Whenever such a group is established, the 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.
Any group established in accordance with these rules will be covered under a single policy naming the county and each public corporation as employers.
The 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.
This program applies to employers previously experience rated under certain classification codes that have been discontinued. It does not apply to new risks or any other programs. The Rating Board will assign any experience reported under the discontinued class code to the replacement class code and the ELRs and D-Ratios of the replacement class code will be used in the derivation of the modification.
Modifications containing classifications where the authorized rates include coverage under the USL&HW Act, are calculated using the formula described in Rule 2 Section (D)(1) of this Plan.
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 Section (D)(1) of this Plan will then apply.