Effective Date of Rule: Thirty-one days after filing.

     Purpose: The 2007 legislature directed L&I to hire one or more outside experts to review and recommend changes to the retrospective rating (retro) program. This rule making implements recommendations from the independent actuarial firm, Oliver Wyman.

     Updating retrospective rating plan tables and revising formulas will improve fairness in the distribution of refunds among the participants in the retro program, and will ensure both retro and nonretro pay for the same percentage of their losses after refunds are distributed. These formulas determine the cost of claims and the calculation of retro premium, which determine the amount of premium refunded or additional premium assessed to participants. These rules offer participants more choices in how they participate financially in the program. In addition, the complete chapter is being rewritten to better conform to the statute, chapter 51.18 RCW, and to improve the overall order and clarity.

     Citation of Existing Rules Affected by this Order: Repealing WAC 296-17-90401 Introduction, 296-17-90402 Definitions, 296-17-90404 Employer options, 296-17-90405 Individual retro -- Enrollment, 296-17-90407 Reenrollment -- Individual retro, 296-17-90409 New group -- Requirements, 296-17-90410 New group -- Agreement finalized, 296-17-90411 Existing group, 296-17-90413 Individual employer group member requirements -- Initial enrollment, 296-17-90414 Individual employer group member requirements -- Reenrollment, 296-17-90421 Sponsoring organization -- Retro group business and industry selection, 296-17-90422 Retro group -- Classification assignments, 296-17-90425 Additional groups, 296-17-90428 Disqualification of a retro group, 296-17-90431 Change of ownership, 296-17-90437 Faxed, e-mail and machine-copied agreements and applications, 296-17-90438 Application, agreements and other required documentation -- Due dates, 296-17-90440 Cancellation of participation, 296-17-90445 Valuation of coverage period, 296-17-90446 Retrospective premium calculation, 296-17-90447 Adjustments to standard premiums after the last mandatory adjustment -- Individual employer, 296-17-90453 Disputes, protests and appeals, 296-17-90484 Direct pay of medical bills -- Prohibited, 296-17-90486 Impartial review of L&I decisions, 296-17-90490 Limitation of liability -- Indemnification, 296-17-90492 Table I, 296-17-90493 Table II, 296-17-90494 Table III, 296-17-90495 Table IV, 296-17-90496 Table V and 296-17-90497 Table VI; new WAC 296-17-901 Risk classification hazard group table, 296-17B-010 Introduction and overview, 296-17B-020 How to read these rules, 296-17B-030 The language we use in these rules, 296-17B-040 Which version of these rules applies to you?, 296-17B-100 Individual retrospective rating, 296-17B-200 Group retrospective rating -- Overview, 296-17B-210 Qualifications for sponsoring organizations, 296-17B-220 Qualifications for new groups, 296-17B-230 Qualifications for existing groups, 296-17B-240 Enrolling a group, 296-17B-250 Employer qualifications for group membership, 296-17B-260 Homogeneity, 296-17B-270 Industry categories, 296-17B-280 Enrolling an employer in a group, 296-17B-300 Choosing loss limits, 296-17B-400 Adjustments, 296-17B-410 Calculating your retrospective rating premiums, 296-17B-420 Premium administration expense charge, 296-17B-430 Incurred loss and expense charge, 296-17B-440 Net insurance charge, 296-17B-500 Determining your standard premiums, 296-17B-510 Assigning claims to coverage periods, 296-17B-520 Determining your losses, 296-17B-530 Determining case incurred losses, 296-17B-540 Determining loss incurred for each claim, 296-17B-550 Determining your incurred losses, 296-17B-560 Determining your hazard group and size group, 296-17B-600 Performance adjustment -- Overview, 296-17B-610 How we determine the performance adjustment factor, 296-17B-620 More about the performance adjustment factor, 296-17B-700 Protest and appeals, 296-17B-710 Account in good standing, 296-17B-720 Prohibited conduct, 296-17B-730 Probation, 296-17B-740 Refunds of standard premiums after final adjustment, 296-17B-750 Notification, 296-17B-760 Coverage periods, 296-17B-770 Common ownership, 296-17B-780 Due dates, 296-17B-810 Loss development factors, 296-17B-820 Discount factors, 296-17B-830 Expected loss ratio factors, 296-17B-840 Claim types, 296-17B-910 Hazard Group 1 Tables, 296-17B-920 Hazard Group 2 Tables, 296-17B-930 Hazard Group 3 Tables, 296-17B-940 Hazard Group 4 Tables, 296-17B-950 Hazard Group 5 Tables, 296-17B-960 Hazard Group 6 Tables, 296-17B-970 Hazard Group 7 Tables, 296-17B-980 Hazard Group 8 Tables, and 296-17B-990 Hazard Group 9 Tables.

     Statutory Authority for Adoption: RCW 51.16.035, 51.16.100, 51.04.020(1), 51.18.010.

      Adopted under notice filed as WSR 10-16-140 on August 4, 2010.

     Changes Other than Editing from Proposed to Adopted Version: Changes were made after the initial proposal: Change the time for submission of group applications from sixty to thirty days prior to the start of a new plan year; remove the words "and hazard group" for purposes of determining the premium size group; correct a word in the hazard group example; revise the application of the expected loss ratio factor in the calculation of case incurred losses; added requirements for the department to evaluate the retrospective rating plan tables every five years; and to repeat the studies that underlie these rules by March 1, 2012.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 53, Amended 0, Repealed 31.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 53, Amended 0, Repealed 31.

     Date Adopted: October 19, 2010.

Judy Schurke

Director

OTS-3409.3

NEW SECTION

WAC 296-17-901   Risk classification hazard group table.   Effective November 19, 2010.

Risk Classification	Hazard Group
101	9
103	8
104	8
105	5
107	9
108	8
112	7
201	9
202	9
210	8
212	9
214	8
217	7
219	7
301	4
302	9
303	9
306	8
307	7
308	3
403	6
502	8
504	9
507	8
508	9
509	9
510	7
511	7
512	9
513	6
514	7
516	8
517	9
518	9
519	9
521	7
540	8
541	9
550	9
551	9
601	7
602	7
603	9
604	7
606	4
607	6
608	7
701	9
803	5
901	8
1002	8
1003	7
1004	6
1005	8
1007	7
1101	5
1102	8
1103	8
1104	3
1105	7
1106	5
1108	5
1109	6
1301	2
1303	3
1304	5
1305	4
1401	9
1404	3
1405	1
1407	4
1501	5
1507	5
1701	7
1702	9
1703	9
1704	7
1801	9
1802	5
2002	6
2004	4
2007	6
2008	6
2009	3
2101	5
2102	3
2104	2
2105	2
2106	4
2201	6
2202	5
2203	2
2204	6
2401	1
2903	4
2904	6
2905	3
2906	4
2907	3
2908	7
2909	4
3101	6
3102	6
3103	6
3104	6
3105	5
3303	3
3304	3
3309	6
3402	6
3403	6
3404	5
3405	3
3406	1
3407	6
3408	1
3409	1
3410	2
3411	6
3412	8
3414	6
3415	9
3501	6
3503	3
3506	7
3509	1
3510	2
3511	6
3512	3
3513	8
3602	4
3603	4
3604	7
3605	5
3701	5
3702	3
3708	5
3802	3
3808	7
3901	1
3902	4
3903	6
3905	1
3906	4
3909	3
4002	7
4101	5
4103	2
4107	6
4108	3
4109	6
4201	6
4301	4
4302	4
4304	6
4305	5
4401	6
4402	2
4404	5
4501	1
4502	5
4504	1
4601	5
4802	7
4803	2
4804	2
4805	2
4806	5
4808	6
4809	3
4810	3
4811	3
4812	2
4813	3
4900	9
4901	6
4902	3
4903	1
4904	3
4905	2
4906	2
4907	4
4908	2
4909	3
4910	6
4911	6
5001	9
5002	3
5003	9
5004	8
5005	9
5006	9
5101	4
5103	3
5106	2
5108	3
5109	6
5201	4
5204	8
5206	6
5207	2
5208	4
5209	6
5300	2
5301	3
5302	5
5305	1
5306	1
5307	4
5308	1
6103	1
6104	2
6105	6
6107	1
6108	1
6109	4
6110	5
6120	5
6121	5
6201	7
6202	6
6203	1
6204	2
6205	4
6206	3
6207	6
6208	2
6209	3
6301	8
6303	5
6304	1
6305	1
6306	4
6308	2
6309	3
6402	1
6403	1
6404	3
6405	5
6406	1
6407	3
6408	4
6409	6
6410	3
6501	1
6502	4
6503	5
6504	1
6505	1
6506	2
6509	2
6510	8
6511	3
6512	6
6601	4
6602	5
6603	4
6604	1
6605	1
6607	4
6608	9
6620	1
6704	2
6705	2
6706	6
6707	1
6708	8
6709	2
6801	3
6802	2
6803	9
6804	3
6809	2
6901	1
6902	9
6903	9
6904	1
6905	1
6906	1
6907	4
6908	4
6909	2
7100	7
7101	8
7102	3
7103	4
7104	3
7105	3
7106	3
7107	2
7108	4
7109	4
7110	5
7111	4
7112	4
7113	3
7114	3
7115	3
7116	8
7117	3
7118	7
7119	6
7120	9
7121	9
7122	5
7200	3
7201	5
7202	6
7203	1
7301	6
7302	7
7307	5
7308	1
7309	2
7400	6
The following classes have no hazard group assigned to them
6614
6615
6616
6617
6618
7204
7205

[]

OTS-3464.1

REPEALER

     The following sections of the Washington Administrative Code are repealed:

WAC 296-17-90401	Introduction.
WAC 296-17-90402	Definitions.
WAC 296-17-90404	Employer options.
WAC 296-17-90405	Individual retro -- Enrollment.
WAC 296-17-90407	Reenrollment -- Individual retro.
WAC 296-17-90409	New group -- Requirements.
WAC 296-17-90410	New group -- Agreement finalized.
WAC 296-17-90411	Existing group.
WAC 296-17-90413	Individual employer group member requirements -- Initial enrollment.
WAC 296-17-90414	Individual employer group member requirements -- Reenrollment.
WAC 296-17-90421	Sponsoring organization -- Retro group business and industry selection.
WAC 296-17-90422	Retro group -- Classification assignments.
WAC 296-17-90425	Additional groups.
WAC 296-17-90428	Disqualification of a retro group.
WAC 296-17-90431	Change of ownership.
WAC 296-17-90437	Faxed, e-mail and machine-copied agreements and applications.
WAC 296-17-90438	Application, agreements and other required documentation -- Due dates.
WAC 296-17-90440	Cancellation of participation.
WAC 296-17-90445	Valuation of coverage period.
WAC 296-17-90446	Retrospective premium calculation.
WAC 296-17-90447	Adjustments to standard premiums after the last mandatory adjustment -- Individual employer.
WAC 296-17-90453	Disputes, protests and appeals.
WAC 296-17-90484	Direct pay of medical bills -- Prohibited.
WAC 296-17-90486	Impartial review of L&I decisions.
WAC 296-17-90490	Limitation of liability -- Indemnification.
WAC 296-17-90492	Table I.
WAC 296-17-90493	Table II.
WAC 296-17-90494	Table III.
WAC 296-17-90495	Table IV.
WAC 296-17-90496	Table V.
WAC 296-17-90497	Table VI.

OTS-3465.8

     Chapter 296-17 WAC defines the standard method for determining the price of workers' compensation insurance for employers insured with the state fund. All employers insured with the state fund must pay the accident fund, medical aid fund, and supplemental pension fund premiums established in that chapter.

     Employers who participate in retrospective rating bind themselves to the rules of the retrospective rating program found in this chapter. Under these sections, a participant's ultimate cost of workers' compensation insurance will be different than under chapter 296-17 WAC.

     Employers participate in retrospective rating because it creates an opportunity to earn refunds of premiums they are required to pay under chapter 296-17 WAC. However, participation involves risk: Participants not successful in controlling losses can be assessed additional premiums.

     Employers control losses by preventing workplace illnesses and injuries, and helping injured workers return to work.

     Employers that participate in retro can enroll either individually or as members of a sponsored group. Enrollment is for a one-year coverage period, but it is possible for employers to join a sponsored group after the group's one-year coverage period has begun, at the beginning of a calendar quarter.

     After a coverage period is over, the department evaluates premiums and claims losses and determines retro premiums according to these rules. If a retro group's or an individually enrolled employer's retro premiums are less than the standard premiums paid initially, that firm or group will receive a refund. If the retro premiums are more than the standard premiums initially paid, the firm or group will be assessed the additional amount. Calculation of retrospective premiums is defined further in this chapter. The department goes through this annual adjustment process three times for each coverage period.

     The department will repeat the studies that resulted in the hazard group assignments and changes to retrospective plan tables that are shown in WAC 296-17-901, 296-17B-300, 296-17B-560, 296-17B-830, and 296-17B-910 through 296-17B-990. The repeated studies will determine whether the results are consistent with the expectation of improved fairness in the distribution of the retrospective rating refunds among participants. These repeated studies will be done by March 1, 2012.

     The department will evaluate and if necessary update the tables beginning at WAC 296-17B-910 every five years.

[]

[]

     Except when the context specifically indicates, "you" does not mean an individual employer enrolled in a sponsored group.

     We have tried to write these rules using plain language. When we use a word or phrase that means other than what it might ordinarily mean, an explanation of the word or phrase can be found in these rules.

[]

[]

     (a) Have an industrial insurance account in good standing;

     (b) Have paid standard premiums at least equivalent to the minimum premium listed in size group 1, Table 1, WAC 296-17B-900, in the four calendar quarters prior to applying for enrollment; and

     (c) Apply for enrollment no later than the fifteenth day of the month before the calendar quarter in which the coverage period begins. The application must indicate the employer's choices regarding loss limits and whether its net insurance charges will be calculated using standard premiums or incurred losses as explained in these rules. The application must be signed by an owner, partner, corporate officer or managing member of the employer's business.

     (2) To reenroll, a currently enrolled employer must submit a new enrollment application no later than the fifteenth day of the month before the calendar quarter in which the new coverage period will begin.

     (3) Employers enrolled individually are responsible for retrospective rating premiums for the coverage period enrolled.

[]

[]

     (1) Has been in existence for at least four years;

     (2) Is an organization with dues paying members; and

     (3) Exists primarily for some purpose other than that of obtaining or offering insurance coverage or insurance related services.

[]

     (1) We approve the organization sponsoring the group;

     (2) The members of the group qualify for group membership;

     (3) The sponsor demonstrates an acceptable workplace safety and accident prevention plan for the group;

     (4) The sponsor demonstrates an acceptable plan for cooperating with the department's claims management activities;

     (5) At least half of the proposed members have been dues paying members of the sponsoring organization for at least one year;

     (6) The standard premiums for the group members for the four quarters prior to enrollment total at least one million five hundred thousand dollars; and

     (7) Enrolling the group will substantially improve workplace safety and accident prevention for its members.

[]

[]

     We will not enroll a new group if the sponsoring organization also sponsors another group in a different industry category that has not yet received its final adjustment for its second coverage period.

[]

     (1) Has an industrial insurance account in good standing;

     (2) Is a dues paying member of the organization sponsoring the group;

     (3) Is not enrolled in retrospective rating either as a member of a group or individually for the coverage period; and

     (4) The employer satisfies the homogeneity requirement of WAC 296-17B-260.

[]

     (1) We determine that the risk classes appropriately assigned to the employer are related to the industry category selected by the sponsoring organization for the group;

     (2) The employer shares common ownership with an employer enrolled in the group that satisfies the requirements of subsection (1) of this section; or

     (3) The employer has been a member of the group since prior to July 25, 1999.

     In evaluating whether an employer's risk classes are related to the industry category, we will consider only those risk classes that define the nature of the employer's business operations insured with the state fund.

[]

     (1) Agriculture and related services, including services related to the care and breeding of animals, and all agricultural related activities including growing, harvesting, packing, and processing for shipment.

     (2) Automotive, truck and boat, manufacturing, sales, repair and related services.

     (3) Construction and related services.

     (4) Distillation, chemicals, food and related services.

     (5) Entertainment, hospitality and related services.

     (6) Facilities, property management, maintenance and related services.

     (7) Government, utilities, schools, health care and related services.

     (8) Grocery stores, grocery distribution centers, bakeries, milk and dairy products processing, delivery to customers and related services.

     (9) Health care, pharmaceutical, laboratories and related services.

     (10) Logging and wood products manufacturing and related services.

     (11) Manufacturing, processing, mining, quarrying, and related services.

     (12) Retail and wholesale stores and professional services such as banks and law firms and related services.

     (13) Temporary help and related services.

     (14) Transportation, recycle, warehousing, facility maintenance and related services.

[]

     By endorsing an application, the sponsor is certifying that the employer is a dues paying member of the sponsoring organization. We must receive the endorsed application no later than the fifteenth day of the month before the calendar quarter the employer wishes to be enrolled for.

     New applications do not need to be submitted by each member annually. As long as the employer maintains their account in good standing, we will automatically reenroll all participants in the group on an annual basis unless notified in writing by the employer or the group that the employer should be removed. This notification must be received by the last day of the prior coverage period.

[]

     (1) Single loss occurrence limit: Your losses incurred for each claim occurrence will be limited by the amount of protection chosen, as described in WAC 296-17B-440. You must choose one of the following single loss occurrence limits:

     • $120,000;

     • $250,000;

     • $500,000;

     • $1,000,000;

     • Unlimited.

     (2) Aggregate loss limits: The product of the sum of your losses incurred and the performance adjustment factor will be limited by the maximum and minimum loss ratios you select. You will choose both a maximum and minimum loss ratio limit from the options available in the tables. You can also choose loss limits between the options listed in the tables.

     (3) Restrictions on choice of limits:

     (a) If you wish to select a single loss occurrence limit other than unlimited, the four most recent quarters of standard premiums must be at least twice the limit chosen. For example, you can only choose a single loss occurrence limit of two hundred fifty thousand dollars if your standard premiums in the four most recent calendar quarters were at least five hundred thousand dollars.

     (b) Your minimum loss ratio limit must be at least ten percentage points lower than your maximum loss ratio limit.

     (c) The three limits must be chosen so that the highest possible retrospective premiums cannot be more than twice the standard premiums, assuming a performance adjustment factor of 1.0 and the same size and hazard groups as your most recent coverage period.

     (d) You can choose any maximum loss ratio between thirty percent and one hundred sixty percent. Also you can choose any minimum loss ratio between zero percent and sixty percent. Your choice needs to be rounded to two decimal places. For example, you could choose a maximum loss ratio of ninety-eight and seventy-six one-hundredths percent.

[]

     (2) We will pick a date approximately nine months after the coverage period ends, determine your standard premiums and losses as of that date, and then calculate your retrospective rating premiums. If the standard premiums you have paid are higher than your retrospective rating premiums, we will refund you the difference. If the standard premiums you have paid are lower than your retrospective rating premiums, we will send you a notice and order of assessment directing you to pay us the difference.

     (3) We will repeat this process of determining standard premiums and losses and calculating retro premiums approximately twenty-one and thirty-three months after the coverage period ended, netting the retro premiums against the retro premiums paid previously.

     (4) For participants having multiple coverage periods being adjusted at the same time, we will add the adjustments together and either pay you the net amount due you or send you a notice and order of assessment directing you to pay the net difference.

     (5) If we send you a notice of assessment you will have thirty days to pay us. We will charge you late penalties and interest pursuant to RCW 51.48.210 on retrospective rating premium assessments you do not pay within thirty days.

     If you are enrolled individually and owe any section of the department money, we may withhold from your refund an amount equal to the debt.

[]

     • Premium administration expense charge;

     • Incurred loss and expense charge;

     • Net insurance charge.

[]

     The premium administration expense factor was determined using premium and expense data from fiscal years 2007 through 2009.

[]

     Our actuaries will determine your incurred loss and expense charge by multiplying your losses incurred by the performance adjustment factor and one hundred seven percent, which is one plus the claims administration expense factor, currently seven percent.

     Data from fiscal years 2000 through 2009 was used to determine the claims administration expense factor.

[]

     Your net insurance charge can be calculated as a percentage of either your standard premiums or your incurred loss and expense charge.

     (1) If you choose to have your net insurance charge calculated using your standard premiums, your net insurance charge will be calculated using the following formula:

(Premium insurance charge factor - Premium insurance savings factor) x (Standard premiums) x (Performance adjustment factor)
Your premium insurance charge factor and premium insurance savings factor will depend on your maximum and minimum loss ratio choice, size group and hazard group, and can be found in WAC 296-17B-910 through 296-17B-990. If you choose a maximum and/or minimum loss ratio between the options found in one of the tables, the department will interpolate to obtain the charge and/or savings factors from the factors found in the tables.

     (2) If you choose to have your net insurance charge calculated using your losses incurred, your net insurance charge will be calculated using the following formula:

(Loss insurance charge factor - Loss insurance savings factor) / [1.0 - (Loss insurance charge factor - Loss insurance savings factor)] x Incurred loss and expense charge
     Your loss insurance charge factor and loss insurance savings factor will depend on your maximum and minimum loss ratio choice, size group and hazard group, and can be found in WAC 296-17B-910 through 296-17B-990. If you choose a maximum and/or minimum loss ratio between the options found in one of the tables, the department will interpolate to obtain the charge and/or savings factors from the factors found in the tables.

[]

     Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 296-17B-500   Determining your standard premiums.   Employers are required to pay accident fund, medical aid, and supplemental pension fund premiums according to chapter 296-17 WAC. Partial payments of premiums are applied first to the liability to the supplemental pension fund, then to the medical aid fund, and finally then to the accident fund. Standard premiums are the premiums an employer pays to the accident and medical aid funds under chapter 296-17 WAC for employment during the coverage period.

     For an employer enrolled in a group after the start of a group's coverage period, we will only consider the employer's premiums for the calendar quarters for which the employer was enrolled.

[]

     We will include occupational disease claims with a date of last injurious exposure with you (prior to the filing of the claim) that falls within the coverage period.

     For an employer enrolled in a group after the start of a group's coverage period, we will only consider the employer's claims related to the calendar quarters for which the employer was enrolled.

[]

     To determine your losses, we first determine the case incurred losses for your claims. To these, we apply loss development, discount and expected loss ratio factors and your single loss occurrence limit to determine your losses incurred for each claim, as explained in these rules. The sum of your losses incurred will be your loss incurred, unless your maximum or minimum loss ratios apply.

[]

     Where not in conflict with these rules, we will use the rules for valuing claims for experience rating found in WAC 296-17-870 (1), (5) through (7), and (10) through (12).

[]

     For each of your claims, we will multiply the case incurred loss by the appropriate loss development, and discount factors to determine the initial loss incurred.

     If you have a fatality, we will use two hundred eighty thousand four hundred dollars as the claim's initial incurred loss for the claim, regardless of the case incurred loss, and before recovery factors if applicable.

     (2) Applying the single loss occurrence limit:

     The initial loss incurred for a claim will be the amount we use as the loss incurred unless the single loss occurrence limit applies.

     The single loss occurrence limit applies when the sum of all initial losses incurred for your claims arising out of a single event is greater than your selected single loss occurrence limit. In that case, each claim's initial loss incurred will be its proportionate share of your single loss occurrence limit.

     (3) Applying the expected loss ratio factors:

     The preliminary loss incurred for a claim will be the amount of the initial loss incurred, after application of the single loss limit, multiplied by the appropriate expected loss ratio factor. The accident fund and medical aid fund portions of each claim will have separate expected loss ratio factors applied.

[]

[]

     (2) We will determine your size group based on your standard premiums using the table in WAC 296-17B-900.

     (3) Hazard group index table.

Hazard Group Number		Hazard Index Number
1		0.22
2		0.26
3		0.37
4		0.51
5		0.75
6		1.00
7		1.22
8		1.76
9		2.78

     (4) Average hazard index table.

Hazard Group Number		Average Hazard Index Value is at Least:		But Less Than or Equal to:
1		0.000		0.239
2		0.240		0.314
3		0.315		0.439
4		0.440		0.629
5		0.630		0.874
6		0.875		1.109
7		1.110		1.489
8		1.490		2.269
9		2.270		2.780

Example:

     • For your retrospective enrollment year, your group has exposure in risk classifications with Hazard Groups 4 and 6 and corresponding standard premiums of $1,000,000 and $2,000,000 during the enrollment year.

Risk Classification Hazard Group		Standard Premium	Hazard Index Number		Adjusted Standard Premium
4		$1,000,000	0.510		$510,000
6		$2,000,000	1.000		$2,000,000
Total		$3,000,000			$2,510,000

     • The Average Hazard Index value for your group is the total adjusted standard premiums divided by the total standard premiums or $2,510,000/$3,000,000 = 0.837 to three decimal places. This value 0.837 is in the range between 0.630 and 0.874.

     • Therefore, your group will be assigned Hazard Group Number 5 during this annual adjustment.

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     A performance adjustment factor (rounded to four decimal places) is then selected, so that when we calculate adjustments, the sum of all adjustments will most nearly equal the target refund amount.

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     A new performance adjustment factor is calculated for each annual retrospective rating annual adjustment so that loss ratios of retro and nonretro employers are equal after refunds and additional premium assessments have been paid.

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     (2) Employers and group sponsors must not pay medical service providers for medical services related to an industrial injury or occupational disease.

     (3) Unless disclosed to the member at the time of enrollment, group sponsors must not require members to pay dues, fees, or continue membership in the retrospective rating program beyond the last date of the coverage year in order to receive their share of refunds, if any.

     If we determine that you have violated any of these provisions, we will remove you from retrospective rating effective the date we notify you, and permanently bar you from further participation in the retrospective rating program. You will remain liable for any additional premium assessments related to your participation prior to your removal, but you will forfeit any right to refunds for adjustments calculated after your removal.

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     Employers share common ownership when:

     (1) One or more owners, directly or indirectly, own a majority interest in both employers; or

     (2) One employer, directly or indirectly, owns a majority interest in another employer.

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     Separate factors will be calculated by fund and also by enrollment period at the time of each annual retrospective rating adjustment.

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Accident Fund	81.2%
Medical Aid Fund	88.0%

     Separate factors will be calculated by fund and also by enrollment period at the time of each annual retrospective rating adjustment.

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     (1) Fatality;

     (2) Total permanent disability pension claim;

     (3) Permanent partial disability claim;

     (4) Time-loss claim;

     (5) Miscellaneous accident fund claim;

     (6) Medical only claim.

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OTS-3410.2

NEW SECTION
WAC 296-17B-910   Hazard Group 1 tables.