Classification Changes, ELR Updates In Commissioner’s Hands

The Workers’ Compensation Insurance Rating Bureau has proposed regulatory changes to consolidate several construction classifications and update the expected loss rates (ELRs) to calculate new X-Mods for September 1st, 2021. The changes are now under review by the California Department of Insurance. The filing received no pushback and no comments as to the contents of the proposed changes. Insurance Commissioner Ricardo Lara’s approval is expected shortly.

Compline has included the proposed factors in its X-Mod calculation system. Members who enter any X-Mod effective date after September 1st will get the proposed version filed. Compline encourages members to run scenarios with a before and after September 1st date to determine how the revised factors will affect their insureds or prospects.

The Bureau is a private organization with quasi-governmental responsibility. It is financially supported exclusively by insurance carriers in whose interests it operates.

The proposal includes plans to eliminate six classifications/subclasses and reassign the underlying operations. “The WCIRB reviewed the iron or steel erection classifications and is recommending that these classifications be consolidated into two classifications – one for structural iron or steel operations and the other for non-structural iron or steel operations,” says WCIRB’s Brenda Keys. There was no opposition to the change filed with the Department.

The proposal eliminates classification 5057 Iron or Steel Erection – Not Otherwise Classified and reassigns these operations to classification 5102 Iron, Steel, Brass, Bronze, or Aluminum Erection – non-structural. The change also eliminates subclass 5102(3) Floor Installation.

The proposal also eliminates classification 5059 Iron or Steel Erection – Structural and reassigns the covered risks to a consolidated class 5040 covering all structural iron and steel erection operations. The consolidation also eliminates subclasses 5040(2) Bridge Building and 5040(3) Painting – steel structures or bridges and reassigns to the new class 5040.

The proposal also eliminates classification 8110 Stores – welding supplies and reassigns the operations to a reworked classification 8010, Stores – hardware, electrical, or plumbing supplies.

The filing also adjusts the experience rating threshold. Currently, the threshold is $9,900 in expected losses but will be lowered to $9,500 if the filing is approved.

Eight additional classifications will have new maximum payroll limits as of September 1st, 2022 if Commissioner Lara approves the filing. The classes that would be subject to the limitations are class:

  • 8601(1) Engineers
  • 8601(2) Oil or Gas Geologists or Scouts
  • 8601(4) Forest Engineers
  • 8741 Real Estate Agencies
  • 8749 Mortgage Bankers
  • 8801 Credit Unions
  • 8808 Banks
  • 8822 Insurance Companies

If adopted, the change will set the maximum payroll at $144,300 per year per employee. The change calls for the limit to be prorated based on the number of weeks in the policy period when the policy is in force for less than 12 months.

The Department took the filing under submission and closed the record on April 8th, which started the 60-day clock ticking for the Commissioner to issue a decision. Therefore, a determination is due during or before the first week in June.