Concerning the adjustment of an employer's experience modification factor in workers' compensation.
Summary
SB26-175 creates a new process in Colorado workers’ compensation law for revising an employer’s experience modification factor when a claim that was originally reported as open is later closed for a lower amount than the amount used in the rating calculation. The bill is aimed at situations where reserves or an open-claim amount inflated the employer’s experience mod, and the final closed-claim amount would materially improve the employer’s rating.
Under the bill, an employer or licensed insurance producer may request a correction only if the claim was reported to the rating bureau with a higher open-claim amount than the final closed-claim amount, and the change would lower the employer’s experience modification factor by at least 0.05 or move it from above 1.0 to 1.0 or below. The employer or producer must notify the carrier within a limited window, and the carrier must then notify the authorized rating organization to revise the factor and credit any resulting premium change within the policy period.
Impact
The bill adds section 8-44-109.5 to the Colorado Revised Statutes, affecting workers’ compensation insurance carriers, employers, licensed insurance producers, and the authorized rating organization that calculates experience modification factors. It requires carriers to seek a revised experience mod based on the actual closed-claim amount rather than the higher amount plus reserves used before closure, and it obligates carriers to pass through any premium reduction resulting from the corrected factor. The act applies to claims closed on or after its effective date of January 1, 2027.
Sentiment
The available record suggests generally favorable or at least noncontroversial treatment of the bill, as it advanced to final passage and was signed by the governor. No committee transcript or recorded vote information is provided here, so there is no evidence of organized opposition in the supplied materials. The bill’s structure indicates a targeted technical correction intended to align premiums more closely with actual claim costs, which is typically framed as a fairness and accuracy measure for employers.
Contention
The main policy issue is whether employers should be allowed to reopen or revise experience modification calculations after a claim closes, especially when the correction can reduce premiums. Potential concerns would likely come from insurers or rating administrators about administrative burden, timing, and the finality of ratings, while employers and insurance producers would favor the ability to correct inflated experience mods caused by open-claim reserves. The bill limits that relief with a narrow eligibility standard and a short notification window, suggesting an effort to balance correction of overcharges against rating stability.