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Eligibility:
A risk shall be eligible for the All Risk Adjustment
Program (ARAP) if it is eligible for experience rating,
either on an intrastate or interstate basis, and the
R value*, the weighted test Ratio,
for the insured is greater than 1.0.
The All Risk Adjustment Program (ARAP)
surcharges experience rated risks, both voluntary and
assigned risk, with a record of losses greater than
expected under the Experience Rating Plan. The purpose of
this program is to provide a revised pricing mechanism for
experience rated risks to share in the underwriting losses
they generate. The application of this program is
mandatory for all eligible insureds and shall apply to
all policies written for such insureds.
The WCRIBMA will calculate
the ARAP adjustment and identify it as a separate factor on
the Experience Rating Calculation sheet. For ratings
effective before September 1, 2007, the ARAP factor,
expressed as a debit percentage, can range from unity (1.00)
to a maximum surcharge of 1.49. For ratings effective
September 1, 2007 and after, the maximum ARAP surcharge
factor decreased from 1.49 to 1.25. The ARAP premium
adjustment is reported under the statistical class code
0277.
Effective January
1, 2008, the ARAP factor is applied to the policy's Standard Premium. (The Deductible Credit was moved inside of Standard Premium effective January 1, 2008.)
Before January 1, 2008,
the ARAP factor was applied to the policy's Standard Premium
less a Massachusetts Benefits Deductible Program credit or a
Massachusetts Benefits Claim and Aggregate Deductible
Program credit, if applicable.
Refer to the Massachusetts
Voluntary Market Premium Algorithm, Appendix E, or the
Residual Market Premium Algorithm, Appendix F.
Experience rated risks with multi-state
operations are subject to the ARAP surcharge for that
portion of the risk in Massachusetts. The ARAP factor is
calculated using Massachusetts losses and expected losses.
The ARAP surcharge is applied to the Massachusetts portion
of the premium.
Click on the following link for an explanation of the
ARAP calculation.
For more information on the All Risk Adjustment Program,
refer to NCCI's Experience Rating Plan Manual,
Massachusetts, State Rule Exceptions, Miscellaneous Rules.
Program References:
September 1, 2007 - The maximum ARAP
surcharge factor decreased from 1.49 to 1.25.
(Refer to
Circular Letter #2054 dated May 18, 2007.)
January 1, 1994 - The enhanced ARAP formula, approved
January 1, 1993, was eliminated. The ARAP formula was
restored to the terms and conditions of ARAP as they existed
immediately before the 1993 revision.
(Refer
to
Circular Letter #1662 dated January 14, 1994.)
January 1, 1993 - The Division of Insurance approved
an enhanced All Risk Adjustment Program (ARAP) formula in
view of the approval of the Massachusetts Assigned Risk
Rating Plan (MARRP). (Refer to
Circular Letter #1616 dated January 7, 1993.)
January 1, 1990 - The Division of Insurance approved
the All Risk Adjustment Program (ARAP). (Refer to
Circular Letter #1518 dated January 3, 1990,
Circular Letter #1526 dated February 14, 1990 and
Circular Letter #1531 dated March 7, 1990.)
Additional References:
Circular Letter #2129 dated September 17, 2009 - NCCI to
Publish the Massachusetts All Risk Adjustment Program (MA
ARAP) Factor on Interstate Experience Rated Risks
Circular Letter #1679 dated May 19, 1994 - Department of
Industrial Accidents Assessment
*(Refer to the Experience Rating Plan
Manual, Massachusetts, State Rule Exceptions, Miscellaneous Rules,
All Risk Adjustment Program (ARAP) #4. Calculation.)
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