Section R20-5-217. Guaranteed Cost Plan: Definition; Formula; Eli- gibility; Cost of Calculation

A.      A Guaranteed Cost Plan means a plan providing for the direct relationship, on an annual basis, of the premium for tax pur- poses and the experience modification developed to reflect the loss payment and incurred loss experience of the self-insured employer. Loss data for three complete years must be provided to calculate the experience modification factor. This plan shall be calculated annually and the premium shall not be subject to further adjustment during the subsequent year.

B.       The formula for the calculation of the Guaranteed Cost Plan is as follows: Payroll x Applicable Rate x Experience Modifica- tion Factor Less Premium Discount.

C.      Only those sell-insurers who satisfy all of the following requirements shall be eligible to use the Guaranteed Cost Plan:

1.        The submission of data concerning paid loss determina- tions and incurred loss reserves for each workers’ com- pensation claimant. The information is used to calculate an experience modification factor for the self-insurer. Three years of loss data shall be formulated to calculate the experience modification factor.

2.        An annual net taxable premium exceeding $100,000.

Historical Note

Former Rule XVII. Section repealed, new Section adopted effective July 6, 1993 (Supp. 93-3). R20-5-217 recodified from R4-13-217 (Supp. 95-1).