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Workers Comp Rating Bureaus Make Mistakes – Who Is Really To Blame?


Are Workers Comp Rating Bureaus Responsible For Rating Mistakes

Most Workers Comp Rating Bureaus are only as good as the data the organizations receive from the carriers.

picture of failed census workers compensation rating bureaus
Wikimedia Public License – KGBO

The data progression on final rates in uncomplicated terms is:

  1. Workers Comp Rating Bureau (NCCI, WCIRB or State Independent) receives data from carriers and member organizations
  2. The bureau’s actuaries compile that data – see Unit Statistical Date for more info
  3. Rates are calculated from extrapolations of this data using current and previous filings by the carriers
  4. Insurance carriers can deviate from those  rates using loss cost multipliers for any classification code 
  5. Employers pay those carriers’ rates in the policy and at the premium audit.

Let us follow along using the numbers from the above inset to see how this occurred in the Keystone State.

Number 1

Very recently, the Pennsylvania Workers Comp Rating Bureau produced a press release that was covered extensively and exclusively by WorkCompCentral.   One of the major carriers allegedly reported their Unit Stat wrong (it happens).

Number 2

The PCRB melded though numbers into their actuarial numbers when the data was compiled.

Number 3

Inflated rates were calculated from those numbers.  The carrier was large enough to cause over a $250,000,000+  overcharge (wow) to the insureds in Pennsylvania.

Number 4

Insurers can deviate from those rates using Loss Cost Multipliers to decrease or usually increase the Loss Costs (pure premium rates).  The loss costs are usually calculated internally by the carrier’s actuaries with recommendations from the underwriters.   One can not be sure if the carriers adjusted the bureau’s erroneous lost costs or used the same Loss Cost Modifiers regardless.

Number 5

The insured employers take the brunt of the erroneous filings by overpaying their premiums based on the erroneous rates.


My question was and it was posed to the PCRB – why was this large error not caught when the data was reported.  The rating bureau said that it was in the range of the allowable data as set by their actuaries.   Followup question – were the ranges too large?

My next question would be – How will this Workers Compensation Rating Bureau data error be fixed so that the state’s insureds will see some relief from the overcharges. The PCRB decided to initiate a 10%+ loss cost rate reduction to offset the data error.  Then again, what if the carriers adjusted their rates for the increased loss cost rates?   Would the carriers then have to readjust their rates again and refile those loss cost multipliers with the Department of Insurance?

My next question is did the carrier (anonymously reported by PCRB) redo all of their prior filings?  Yes, they did, so did the insured employers will receive refunds when these new filings occur?

Moral Of The Story

The moral of the article is to always question anything that does not look right with your workers compensation policy; any endorsements during the policy period; your premium audit and bill;  loss runs; experience modification factor; or any part of not just your WC policies.

Sometimes even the wrong data comes from the workers compensation rating bureaus.

Related: Rating Bureau Rates Have Little Effect on Policies

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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