Adjust Experience Modification Factor in Workers' Compensation
Summary
SB175 amends Colorado workers’ compensation law to require insurers, including Pinnacol Assurance, to notify an employer’s authorized rating organization when a closed claim should be reflected in the employer’s experience modification factor using the actual dollar amount paid for the claim, rather than the higher open-claim amount plus reserves that may have been used before closure. The bill creates a process for employers or licensed insurance producers to request this adjustment after the claim has been reported to a rating bureau and within 31 days after the employer’s rating effective date.
The bill limits when a correction may be requested: it applies only when an open claim was reported at a higher amount than the final closed-claim amount, and the lower amount would reduce the employer’s experience modification factor by at least 0.05 or move it from above 1.0 to 1.0 or below. Once notified, the authorized rating organization must update the factor within 30 days, and the insurer must credit any resulting premium change during the employer’s policy period. The act applies only to claims closed on or after the effective date, January 1, 2027.
Impact
The bill adds section 8-44-109.5 to the Colorado Revised Statutes, changing how workers’ compensation experience modification factors are recalculated after claim closure. It affects insurers writing workers’ compensation coverage, rating organizations, employers, and licensed insurance producers by creating a statutory mechanism to correct experience ratings and associated premiums when a closed claim ends up costing less than the amount initially reported.
Sentiment
The available voting history shows strong and unanimous support in both chambers, with no recorded dissent in committee or on third reading. The bill was advanced on consent in the Senate committee and passed both the Senate and House on 34-0 and 59-0 floor votes, respectively, suggesting broad agreement that the adjustment process is a technical or fairness-oriented fix for employers.
Contention
No major opposition is reflected in the provided record, and there are no committee transcripts indicating substantive debate. The main policy issue implicit in the bill is the balance between employer fairness and administrative certainty for insurers and rating bureaus: employers and producers gain a path to lower premiums when final claim costs are lower, while insurers and rating organizations must process post-closure adjustments within defined time limits and only in qualifying cases.