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Anniversary Rating Date

All rules and rates apply to a policy until the next anniversary rating date. We establish the next anniversary rating date as the date upon expiration of a full one year policy. Examples provided.;

All rules and rates apply to a policy until the next Anniversary Rating Date (ARD). We establish the next anniversary rating date as the date upon expiration of a full one year policy. Example:

 

07/01/2015                                      07/01/2016                                     

 

 

 

 

 

 

 

 

 

 

    01/01/2016                                               01/01/2017 one year

 New policy date

 

 

Short term mod

7/1/16 1/1/17

 

7/1/15 = anniversary rating date

7/1/16 = next anniversary rating date (policy effective one year)

1/1/16 = new, rewritten policy

1/1/17 = new anniversary rating date, new mod effective date (policy effective one year)

 

1/1/16 policy uses the rates effective 7/1/15 for the period 1/1/16 - 7/1/16

1/1/16 policy uses the rates effective 7/1/16 for the period 7/1/16 - 1/1/17

 

7/1/16 mod is short termed to expire on 1/1/17, concurrent with new anniversary date

 

A policy subject to this rule should have attached to it the Anniversary Rating Date Endorsement (WC 00 04 02).

 

Right and Wrong Examples:

 

Policy period: 02/01/15 - 02/01/16

Normal ARD: 12/01/14

Next ARD: 02/01/16

 

Based on Rule 3.A.2 ARD Table 1 of the Basic Manual:

 

For a single policy risk whose...

The insurance carrier must apply...

Policies have run consecutively or
The risk is a new entity

The rates effective on the normal ARD for the full term of:

·  The policy beginning on that date or

·  Any other policy beginning up to three months after that date

Refer to User's Guide for an example.

 

This rule also indicates that the new normal anniversary rating date would be 12 months after the effective date of the new policy (02/01/16). Therefore, the right application of the classification rates are as follows:

 

The classification rates effective 12/01/14 (normal anniversary rating date) would apply to the full term of the policy, effective from 02/01/15 to 02/01/16.

 

In Basic Manual Rule 3.A.2 ARD Table 1. In this section it is written:

 

Policy has been cancelled & rewritten, either by the same or another carrier within three months after the normal ARD...

To the rewritten policy, all rules, classifications & rates of the rewriting carrier that were in effect as of the normal ARD:
Until the next ARD has been reached, or
Until the next ARD is established by the rating organization
Refer to User's Guide for an example.

Policy has been cancelled & rewritten, either by the same or another carrier more than three months after the normal ARD...

The rates in effect as of the normal ARD to the new policy until the next normal ARD.
The rates in effect as of the next normal ARD to the new policy until the expiration date of the policy.
The rates in effect as of the new ARD annually thereafter as the new normal ARD. This will be the date that is 12 months after the effective date of the new policy.
Refer to User's Guide for an example.

 

In this example, the "next anniversary rating date," would be 02/01/16, based on Part 2.B. of the Experience Rating Plan Manual and Basic Manual Rule 3.A.2, ARD Table 1, paragraph 3. Therefore, classification rates effective 12/01/14 (normal anniversary rating date), would be in effect until 02/1/16 (next anniversary rating date).

 

An example of a wrong interpretation of the anniversary rating date rule is shown below:

Carrier applies 12/01/15 classification rates to the policy from 02/01/16 to 12/01/16, then as of 12/01/16 to 02/01/17 applies the new classification rates (effective 01/01/16).

 

NOTE: Basic Manual Rule 3.A.2, ARD Table 1, paragraph 1 does not take the place nor does it invalidate Rule 3.A.2, ARD Table 1, paragraph 2 & 3, it is provided only to supplement the interpretation of the Anniversary Rating Date rule.

 

Multiple Policy Risk

Reference Experience Rating Plan Manual Rule 2.B.2., Rating Effective Date Determination Table: the ARD is determined by the policy with the "largest amount of estimated standard premium."

 

The ARD rule 2.B.1. further provides some flexibility by the wording "...unless a different date has been established by the rating organization."

 

Major Change Coming in 2017 
The Anniversary Rating Date (ARD) rule as we know it will be eliminated effective May 1, 2017 in Indiana and most other states.  With the elimination of the rule, the policy effective date will determine the application of rules, classifications and rates.  The rules relating to the establishment of an employer’s Rating Effective Date for Experience Rating will not change.
 So let’s say we have a policy effective  10/1/16 to 10/1/17, with a 10/1/16 Experience Rating Modification (EMR).  On July 1, 2017 that policy is cancelled and rewritten to be effective 7/1/17 to 7/1/18.  Prior to this change (the elimination of the ARD) that policy would use the 2016 rates until 10/1/17 and then amend the rates mid-term to the 2017 values on 10/1/17.  With the elimination of the ARD, the 2017 rates will apply to the entire 12 month term 7/1/17 to 7/1/18.  However, their  EMR will change on 10/1/17 and apply until a new EMR is issued to be effective on 7/1/18.
For details see Circular CIF-2015-25.

 

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The material in this document has been prepared and shared for informational purposes only and should not be relied upon as legal advice on any particular situation.