In an effort to align with national insurance rating, the Wisconsin Commissioner of Insurance is eliminating the “Anniversary Rating Date” effective May 1, 2017. What does this mean for Wisconsin employers? You no longer need to wait for your effective date to take advantage of new rates.
While the rate is one piece of the puzzle, other elements that play a vital role:
- How does changing your effective date affect your MOD?
- What are the short term policy cancellation penalties?
- What are the possible dividend implications?
While some of these answers remain to be seen, below are excerpts from the IIAW of Wisconsin in a recent article by Bernard Rosauer, President of the WCRB.
Anniversary Rating Date (ARD) Endorsement Withdrawal
The ARD change no longer requires the use of prior policy effective dates to govern the application of rates, rules and forms for workers compensation.
Without the ARD rule, nothing would prohibit an employer from cancelling a policy to take advantage of a recent rate filing decrease. The short rate penalty exists which acts as a deterrent to an employer who cancels. That penalty would likely substantially reduce, or complete eliminate, any “gains” to be had by the cancelling early to take advantage of the new, lower rates. Also, Wisconsin statute contains specific prohibitions for a carrier to cancel a policy except for issues such as nonpayment of premium, breach of the policy terms, fraud, and misrepresentation.
How Will the New ARD Rule Be Implemented?
The WCRB’s standard is to file changes on a new and renewal basis with a specific implementation date. For this particular item, this means that the ARD is eliminated for new renewal, and written policies effective May 1, 2017 and later.
Example 1
A policy is effective April 30, 2017 (one day before ARD is eliminated) and has an ARD of August 1, 2017. That August 1, 2017 ARD would still apply. When the renewal policy is written April 30, 2018, the rates in effect as of that policy effective date would apply for the full term of the policy.
Example 2
A policy is effective September 1, 2016. The rates effective October 1, 2015 apply until the September 1, 2017 renewal. The policy is cancelled and rewritten effective May 1, 2017. No ARD applies and the rates effective October 1, 2016 are applicable to the May 1, 2017 rewritten policy.
With complex and convoluted changes such as the ARD withdrawal, it is critical you have an agent with the analytical tools and capabilities to provide a full scope of the financial implications that can result from simply changing your effective date. R&R’s Work Comp Division is at the forefront of this change and can provide a thorough analysis to support your insurance decisions.
For more information, download the Anniversary Rating Date Road Map or contact your Knowledgebroker at R&R.
