Statutes, codes, and regulations
Arizona Administrative Code
Title 20 - COMMERCE, FINANCIAL INSTITUTIONS, AND INSURANCEChapter 05 - INDUSTRIAL COMMISSION OF ARIZONA
Article 15 - WORKERS' COMPENSATION SELF-INSURANCE
Section R20-5-1539 - Retrospective Rating Plan; Eligibility; Formula; Necessary Information

Ariz. Admin. Code § 20-5-1539

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Current through Register Vol. 30, No. 49, December 6, 2024
Section R20-5-1539 - Retrospective Rating Plan; Eligibility; Formula; Necessary Information
A. The Division may require a Self-Insurer to use a Retrospective Rating Plan for purposes of premium taxes required under A.R.S. §§ 23-961 and 23-1065 if:
1. The Self-Insurer has an Experience Modification Rate specific to Arizona that exceeds 1.10 for two consecutive years; or
2. The Self-Insurer demonstrates financial instability as evidenced by declining financial ratios, an increase in leveraged debt or a net loss.
B. The Division shall calculate the net taxable premium under a Retrospective Rating Plan, using the most recent year's data, as follows: {[(payroll multiplied by the Payroll Classification Rate) multiplied by (the Experience Modification Rate specific to Arizona) multiplied by (1 minus the Deviation Rate) multiplied by the (Basic Premium Factor)] plus [(losses for the current year plus adjusted losses from the previous year) multiplied by (the Loss Conversion Factor)]} multiplied by the tax multiplier.
C. The Retrospective Rating Plan applies only to operations and payroll in Arizona. The Self-Insurer shall combine all operations in Arizona to calculate the premium taxes required under A.R.S. §§ 23-961 and 23-1065.
D. The Experience Modification Rate specific to Arizona for purposes of determining the net taxable premium under a Guaranteed Cost Plan shall be calculated in the manner described in R20-5-1534(C). If the Division cannot calculate an Experience Modification Rate in the second and all following tax years because the Self-Insurer does not have any injuries, the Experience Modification Rate shall be set at 1.00.
E. The Division shall use assigned risk rates to calculate the premium taxes required under A.R.S. §§ 23-961 and 23-1065 for all SelfInsurers on the Retrospective Rating Plan. The assigned risk rates shall be established annually by an actuary retained by the Commission that is a member the American Academy of Actuaries (MAAA) or a fellow of the Casualty Actuarial Society (FCAS).
F. A Self-Insurer shall provide the information required by R20-5-1536(E) in support of using a Retrospective Rating Plan.

Ariz. Admin. Code § R20-5-1539

New section made by final rulemaking at 28 A.A.R. 3435, effective 10/5/2022.