The month and day that manual rules, rates and the experience modifier apply to a work comp policy. It is usually the policy effective date and each renewal date after the policy inception. It may be a different date if the policy has been issued for a different term from the normal anniversary date. This may occurr if the policy is cancelled mid-term and re-written to the same or other carrier.
Otherwise known as ARD, this date is shown on the workers compensation application in addition to the inception and expiration dates. The basic purpose of the anniversary rating date is to prevent a workers comp insured, policyholder, or insurance company from cancelling the workers comp policy midterm, before the normal expiration date, to take advantage of lower rates that may now be in effect that were not available when the policy was originally written.
As a tool in determining the proper application of the Anniversary Rating Date or ARD, NCCI, within their rules manual provides tables 1 through 4. As an example of the application of the Anniversary Rating Date, we'll assume a workers compensation policy is in effect with an effective date of July 1, 2009. This policy is then cancelled and rewritten with a new effective date of say January 1, 2010. In this example the new policy effective January 1, 2010 would carry an anniversary rating date of July 1, 2009. The key here is that the rates used for the new policy, effective January 1, 2010, are those that were in effect July 1, 2009. The anniversary date is then moved up to the renewal date of January 1, 2011 when all rates and modifiers are then converted to the new date. Confusing? Yep!
And as an extra treat, the applicatiion and use of anniversary rating dates may differ between states and certainly between different rating or advisory organizations. Insurance companies, agents and their clients have all made mistakes when it comes to the anniversary rating date issue. And in some instances, costly mistakes! So be careful!
Be sure to contact us if you have any questions or if we can be of assistance to you with Anniversary Rating Date issues.