Workers compensation shall be deemed to mean all obligations imposed upon the insurer by the provisions of the Workers Compensation Act (M.G.L. Chapter 152, as amended), including compensation, statutory medical aid, and loss from liability for damages on account of personal injuries sustained by any employee or employees of the insured under the provisions of Section 25 of said law.
Description of Workers Compensation Coverage: Workers compensation insurance provides coverage for the statutory obligation of an employer to provide benefits for employees as required by:
a. Workers Compensation law or occupational disease law of Massachusetts or any state or territory of the United States, including the District of Columbia, and
b. United States Longshore and Harbor Workers' Compensation Act.
Description of Employers Liability Coverage: Employers liability insurance provides coverage for the legal obligation of an employer to pay damages because of bodily injury by accident or disease, including resulting death, sustained by an employee. Employers liability coverage applies only if the injury or death of an employee arises out of and in the course of employment and is sustained:
a. In the United States of America, it territories or possessions, or Canada, or
b. While temporarily outside the United States of America, its territories or possessions, or Canada, if the injured employee is a citizen or resident of the United States or Canada; but suits for damages and actions on judgments must be in or from a court of the United States, it territories or possessions or Canada.
Definition
Remuneration means money or substitutes for money.
a. Wages or salaries including
retroactive wages or salaries;
b. Total cash received by employees for commissions and draws against commissions.
c. Bonuses including stock bonus plans;
d. Extra pay for overtime work except as provided in Rule V-E; of Massachusetts
Workers' Compensation and Employers Liability Insurance Manual.
e. Pay for holidays, vacations or periods of sickness.
f. Payment by an employer of amounts other-wise required by law to be paid by
employees to statutory insurance or pension plans, such as the Federal Social Security
Act;
g. Payment to employees on any basis other than time worked, such as piecework,
profit sharing or incentive plans;
h. Payment or allowance for hand tools or power tools used by hand provided by
employees either directly or through a third party and used in their work or operations
for the insured;
i. The rental value of an apartment or a house provided for an employee based on
comparable accommodations;
j. The value of lodging, other than an apartment or house, received by employees as
part of their pay, to the extent shown in the insured's records;
k. The value of meals received by employees as part of their pay to the extent shown
in the insured's records.
l. The value of store certificates, merchandise, credits or any other substitute for
money received by employees as part of their pay.
m. Payments for salary reduction, retirement or cafeteria plans (IRC 125) that are made
through deductions from the employees or placed by an employer into third-party pension
trusts.
n. Davis-Bacon wages paid to employees or placed by an employer into third-party
pension trusts;
o. Annuity plans;
p. Expense reimbursements to employees to the extent that an employer's records do
not substantiate that the expense was incurred as a valid business expense;
q. Payment for filming of commercials excluding subsequent residuals which are
earned by the commercial's participant(s) each time the commercial appears in print or is
broadcast.
a. Tips and other gratuities
received by employees;
b. Payments by an employer to group insurance or group pension plans for employees.
c. The value of special rewards for individual invention or discovery;
d. Dismissal or severance payments except for time worked or accrued vacation.
e. Payments for active military duty;
f. Employee discounts on goods purchased from the employee's employer;
g. Expense reimbursements to employees to the extent that an employer's records
substantiate that the expense was incurred as a valid business expense.
The expense constant is a premium charge which applies to every policy in addition to the premium inclusive of loss constants. It covers expenses such as those for issuing, recording and auditing, which are common to all workers compensation policies regardless of premium size.
Premium discount recognizes that the relative expense of issuing and servicing larger premium policies is less than for smaller premium policies.
Standard Premium means, for the purposes of this rule, Maaachusetts premium determined on the basis of authorized rates, disease loadings, nonratable elements, aircraft seat surcharges, premium for increased limits of liability, experience rating or merit rating modifications, Massachusetts Construction Classification Premium Adjustment Program credit, loss constants, and minimum premiums. The expense constant, all Risk Adjustment Program (ARAP) modification, premium discount, Qualified Loss Management Program (QLMP), Massachusetts Benefits Deductible Program or Massachusetts Benefits Claim and Aggregate Deductible Program credits, shall be excluded from determination of the standard premium.
To enhance the usefulness of their ratings, A.M. Best assigns each company a Financial Size Category (FSC). The FSC is designed to provide the subscriber with a convenient indicator of the size of a company in terms of its statutory surplus and related accounts. Many insurance buyers only want to consider buying insurance coverage from companies that they believe have the sufficient financial capacity to provide the necessary policy limits to insure their risks. Although companies utilize reinsurance to reduce their net retention on the policy limits they underwrite, many buyers still feel more comfortable buying from companies perceived to have greater financial capacity.
Best’s Financial Size Category is based on reported policyholder’s surplus plus conditional or technical reserve funds, such as mandatory securities valuation reserve, other investment and operating contingency funds and miscellaneous voluntary reserves reported as liabilities.
1998 FINANCIAL SIZE CATEGORY (FSC)
BY INDIVIDUAL COMPANIES
| Financial Size Category | Adjusted Policyholders’ Surplus |
Number |
Distribution |
||
| Class I | Less than | 1 |
214 |
7.2% |
7.2% |
| ClassII | 1 to |
2 |
208 |
7.0 |
14.2 |
| Class III | 2 to |
5 |
355 |
11.9 |
26.2 |
| Class IV | 5 to |
10 |
286 |
9.6 |
35.8 |
| Class V | 10 to |
25 |
337 |
11.3 |
47.1 |
| Class VI | 25 to |
50 |
238 |
8.0 |
55.1 |
| Class VII | 50 to |
100 |
209 |
7.0 |
62.2 |
| Class VIII | 100 to |
250 |
307 |
10.3 |
72.5 |
| Class IX | 250 to |
500 |
215 |
7.2 |
79.7 |
| Class X | 500 to |
750 |
80 |
2.7 |
82.4 |
| Class XI | 750 to |
1000 |
69 |
2.3 |
84.8 |
| Class XII | 1000 to |
1,250 |
36 |
1.2 |
86.0 |
| Class XIII | 1,250 to |
1,500 |
114 |
3.8 |
89.8 |
| Class XIV | 1,500 to |
2,000 |
73 |
2.5 |
92.3 |
| Class XV | 2000 or |
greater |
230 |
7.7 |
100% |
The objective of Best’s rating system is to provide an overall opinion of an insurance company’s ability to meet its obligations to policyholders. Their opinions are derived by evaluating a company’s financial strength, operating performance and market profile as compared to Best’s quantitative and qualitative standards.
Best’s Ratings are divided into two broad categories - Secure and Vulnerable. This delineation provides our subscribers with a gauge of how Best views a company’s ability to meet its obligations to policyholders. Based on A.M. Best’s Solvency Studies, Secure rated companies have experienced a significantly lower failure frequency than Vulnerable rated companies, hence the justification for the two terms.
Secure Best’s Ratings
A++ and A+ Superior
Assigned to companies which have, on balance, superior financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, have a very strong ability to meet their ongoing obligations to policyholders.
A and A- (Excellent)
Assigned to companies which have, on balance, excellent financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, have a strong ability to meet their ongoing obligations to policyholders.
B++ and B+ (Very Good)
Assigned to companies which have, on balance, excellent financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, have a good ability to meet their ongoing obligations to policyholders.
Vulnerable Best’s Ratings
B and B- (Fair)
Assigned to companies which have, on balance, fair financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, have an ability to meet their current obligations to policyholders, but their financial strength is vulnerable to adverse changes in underwriting and economic conditions.
C++ and C+ (Marginal)
Assigned to companies which have, on balance, marginal financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, have an ability to meet their current obligations to policyholders, but their financial strength is vulnerable to adverse changes in underwriting and economic conditions.
C and C- (Weak)
Assigned to companies which have, on balance, weak financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, have an ability to meet their current obligations to policyholders, but their financial strength is vulnerable to adverse changes in underwriting and economic conditions
D (Poor)
Assigned to companies which have, on balance, poor financial strength, operating performance and market profile when compared to the standards established by the A.M. Best Company. These companies, in their opinion, may not have an ability to meet their current obligations to policyholders, but their financial strength is extremely vulnerable to adverse changes in underwriting and economic conditions
E (Under Regulatory Supervision)
Assigned to companies which have been placed by an insurance regulatory authority under a significant form of supervision, control or restraint, such as conservatorship or rehabilitation, but does not include liquidation. It may also be assigned to companies issued cease and desist orders by regulators outside their home state or country.
F (In Liquidation)
Assigned to companies which have been placed under an order of liquidation by a court of law or whose owners have voluntarily agreed to liquidate the company. Note: Companies that voluntarily liquidate or dissolve their charters are generally not insolvent.
S (Rating Suspended)
Assigned to rated companies that have experienced sudden and significant events affecting their financial position or operating performance whose rating implications cannot be evaluated due to a lack of timely or adequate information.
Rating Modifiers
Rating modifiers are added to Best’s Ratings to identify companies whose assigned rating is based on a Group g, Pooling P, or Reinsurance r, affiliation with other insurers; or are Under Review (u) and may be subject to near-term change. The modifier appears as a lower-case suffix to the rating i.e., A g or A r. The Rating Modifier provides our subscribers with a quick reference as to the technical basis of the assigned rating, which is further explained in the full company report.
This is the estimated total cost of the policy including the Department of Industrial Accidents (DIA) surcharge and expense constant. The word estimated refers to the fact that your premiums are based on payroll and your payroll is subject to fluctuation over the policy period. These fluctuations are accounted for by audits performed by your carrier annually, and as the name suggests often result in a different final premium.
The display detail screen gives you a detailed breakdown of how your premium is calculated. This format is based on the rules set forth by each states division of insurance.
Agents who understand the nature of competition, and feel they have something to offer, are drawn to our site. When you go to this page you'll see a list of agents who represent the carrier selected, and the information you need to contact them. These agents are ready and willing to give you their best price.
This is a factor that deals with the rating of the policy. The experience modification figure is based on the insured's loss experience. The factor is used to increase or decrease the manual rates of insurance.
The merit rating credit is a factor similar to the experience mod that is used for accounts that do not meet minimum premium size requirements to be eligible for an experience mod factor. It is a 5%credit applied to the premium for individual businesses that have had no loss time cases in a three year period.
This factor is also similar to the experience mod, except that it is applied in addition to the experience mod and is only to the detriment of the insured. Whereas, the experience mod is more heavily waited to reflect frequency of loss experience the ARAP (All Risk Adjustment Program) factor represents severity of loss to a greater degree.