Eligibility:

A risk is eligible for a One Year Plan provided the estimated Standard Premium* is at least $25, 000. A risk is eligible for a Three Year Plan provided the estimated Standard Premium for three years is at least $75,000. For the purpose of this rule, estimated Standard Premium may include other casualty insurance.

Retrospective rating is not allowed in the Massachusetts Workers' Compensation Assigned Risk Pool.

Retrospective rating is an individual risk rating plan that is an optional plan. Both the employer and the insurance carrier must agree to the Retrospective Rating Plan. Retrospective rating may be applied on either an interstate or intrastate basis. The Experience Rating Plan is applicable to retrospective rated policies. Premium discount is not applicable to retrospectively rated policies.

The object of the Retrospective Rating Plan is to adjust the premium for the insurance to which it applies on the basis of losses incurred during the period covered by that insurance. The intent is to charge a premium which reflects those losses. Within the principle of insurance, retrospective rating establishes the reasonable cost of insurance by using losses incurred during the term of that insurance and adding the insurance carrier's expenses and the taxes on premiums. The Plan provides an incentive to the insured to control and reduce losses because the retrospective premium will be the result of losses during the rating period. To the extent that the insured controls losses, there is a reward through lower premiums.

The Massachusetts Benefits Deductible Program and the Massachusetts Benefits Claim and Aggregate Deductible Program are not available to insureds with retrospectively rated policies.
(Refer to Circular Letter #1624 dated February 3, 1993 and Circular Letter #1761 dated dated September 18, 1996.)

Carriers may apply for downward premium deviations attributable to the modification of one or more retrospective rating plan parameters (e.g., loss conversion factor, profit provision, other expense provisions, etc.).
(Refer to Circular Letter #1798 dated April 22, 1998)

For more information on Retrospective Rating, refer to the Retrospective Rating Plan Manual issued by NCCI and the Retrospective Rating Plan Manual, Massachusetts State Special Rules and Massachusetts State Special Rating Values.

Retrospective Rating Plan References:

April 1, 2010 - The Commissioner of Insurance has approved for use in Massachusetts NCCI's updated 2009 Retrospective Rating Plan Manual for Workers' Compensation and Employers Liability Insurance, as well as updated Massachusetts State Exception Pages, and corresponding revisions to the Retrospective Rating Plan Endorsements, including the adoption of NCCI's new Retrospective Rating Plan Premium Endorsement-Large Risk Alternative Rating Option (LRARO). (Refer to Circular Letter #2137 dated dated January 8, 2010.)

July 1, 2000 - The Commissioner of Insurance approved the following two tables applicable to new and renewal policies only:
      1998 - Table of Insurance Charges (Table M) for Massachusetts
      1998 - Table of Expected Loss Ranges
(Refer to Circular Letter #1843 dated March 27, 2000.)

October 1, 1994 - The Division of Insurance approved the new procedure, Insurance Charge Reflecting Loss Limitation (ICRLL), which eliminated the need for Excess Loss Adjustment Amounts (ELAA's). This also eliminated the Retrospective Rating Plan Options I, II, III, and IV (Tabular Plans) and the phrase "Rating Option V". Along with these changes the following two retrospective premium endorsements were eliminated, WC000501 and WC000502, and the following six revised retrospective premium endorsements were approved WC000503A, WC000504A, WC000505A, WC000512A, WC000513A and WC000514A.
(Refer to Circular Letter #1688 dated August 2, 1994 and Circular Letter #1764 dated September 30, 1996.)

January 1, 1993 - The Division of Insurance approved the Large Risk Alternative Rating Option, a provision that allows risks with an annual estimated workers compensation Standard Premium in excess of $500,000 to be retrospectively rated as mutually agreed upon by the insured and the insurer. This new retrospective rating option for large risks provides an opportunity for the specific, unique servicing requirements and risk associated with a large insured to be recognized and adjusted for in the calculation of its retrospective premium. (Refer to Circular Letter #1617 dated January 7, 1993.)

Additional References:

Circular Letter #2364 dated March 31, 2020 - Manual Rates and Rating Values Effective July 1, 2020

Circular Letter #2362 dated March 31, 2020 - General Revision of Rates Effective July 1, 2020 Applicable to New and Renewal Business

Circular Letter #2330 dated March 26, 2018 - Manual Rates and Rating Values Effective July 1, 2018

Circular Letter #2328 dated March 23, 2018 - General Revision of Rates Effective July 1, 2018 Applicable to New and Renewal Business

Circular Letter #2281 dated April 21, 2016 - Manual Rates and Rating Values Effective July 1, 2016

Circular Letter #2279 dated April 20, 2016 - General Revision of Rates Effective July 1, 2016 Applicable to New and Renewal Business

Circular Letter #2238 dated March 21, 2014 - Manual Rates and Rating Values Effective April 1, 2014
Circular Letter #2236 dated March 21, 2014 - General Revision of Rates Effective April 1, 2014 Applicable to New and Renewal Business
Circular Letter #2054 dated May 18, 2007 - General Revision of Rates Effective September 1, 2007, Applicable to New and Renewal Business, Retrospective Rating Plan Changes
Circular Letter #1993 dated June 15, 2005 - Retrospective Rating Plan Changes Effective September 1, 2005 (changes in parameters concurrent with general revision of rates)
Circular Letter #1934 dated September 17, 2003 - Retrospective Rating Plan Changes Effective September 1, 2003 (changes in parameters concurrent with general revision of rates)
Circular Letter #1879 dated June 19, 2001 - Retrospective Rating Plan Changes Effective July 1, 2001 (changes in parameters concurrent with general revision of rates)
Circular Letter #1834 dated September 17, 1999 - Retrospective Rating Plan Changes Effective September 1, 1999 (changes in parameters concurrent with general revision of rates)
Circular Letter #1797 dated April 17, 1998 - Retrospective Rating Plan Changes Effective February 14, 1998 (changes in parameters concurrent with general revision of rates)
Circular Letter #1750 dated May 6, 1996 - New Premium Discount Tables and Corresponding Expense Ratios for Retrospective Rating, Effective May 1, 1996
Circular Letter #1731 dated November 17, 1995 - Revised Excess Loss Factors and Allocated Expense Factors, Revised Expected Loss Size Ranges for Entry into the Table of Insurance Charges, State and Hazard Group Differentials, Effective January 1, 1996
Circular Letter #1719 dated May 26, 1995 - Massachusetts Retrospective Premium Endorsement Flexibility Options, WC200501, Effective April 1, 1995
Circular Letter # 1714 dated March 7, 1995 - Item R-1293 Retrospective Rating Plan Flexibilities, One Year Plan and Three Year Plan, Effective April 1, 1995
Circular Letter #1683 dated June 3, 1994 - Revised Expected Loss Ranges for Entry into the Table of Insurance Charges, Effective July 1, 1994
Circular Letter #1681 dated May 23, 1994 - Update to Expected Loss Ranges for Entry into the Table of Insurance Charges and Revised Retrospective Tables of Rating Values, Effective July 1, 1994
Circular Letter #1605 dated May 5, 1992 - Item R-1266 Update to Expected Loss Ranges for Entry into the Table of Insurance Charges, Effective May 1, 1992
Circular Letter #1543 dated August 13, 1990 - Revised Excess Loss Factors, Effective September 1, 1990
Circular Letter #1542 dated August 13, 1990 - Item R-1257 Update to Expected Loss Ranges for Entry into the Table of Insurance Charges, Effective September 1, 1990
Circular Letter #1531 dated March 7, 1990 - Questions and Answers, All Risk Adjustment Program (ARAP)- Retrospective Rating

 

* Standard premium is defined by the Retrospective Rating Plan Manual as the premium for the risk determined on the basis of authorized rates, any experience rating modification, loss constants where applicable, and minimum premiums. Determination of standard premium excludes:

• premium discount,
• expense constant,
• premium resulting from the Non-Ratable Element Codes listed in the Experience Rating Plan Manual,
• premium developed by the passenger seat surcharge under Code 7421 - Aircraft Operation - flying crew, and
• premium developed by the occupational disease rates for risks subject to the Federal Coal Mine Health and Safety Act.