How is the Member Exposure Base Calculated?
For self-insurers, the exposure base is the modified adjusted pure premium. For insurer members, the exposure base is the adjusted pure premium. Experience rating modifications are reflected in both insurer and self-insurer exposure bases.
The WCRA reinsurance rates are applied to the exposure base to obtain a member's premium.
Exposure Base: Insurers
Adjusted pure premium for insurer members is earned premium at the designated statistical reporting level multiplied by an adjustment factor* of 1.2.
The WCRA obtains data on earned premiums (for regular plus large deductible business) from the Annual Call for Experience that members submit to the Minnesota Workers’ Compensation Insurers Association (MWCIA). Experience rating modifications of the insurers’ individual policyholders are incorporated within the Annual Call data.
Exposure Base: Self-insurers
For self-insurers, the exposure base is modified adjusted pure premium, determined by first multiplying pure premium by an adjustment factor* of 1.2, then multiplying that result by the experience rating modification factor.
The pure premium exposure for self-insurers is calculated from the Minnesota payroll report, which is due at the WCRA on April 1 of each year.
Revising the Estimated Exposure Base
A WCRA member may revise its estimated exposure base to better reflect current premium or payroll levels. Estimated exposure base is revised if both of the following requirements are met.
- The member’s revised estimated exposure base must be at least 15 percent greater or less than the original estimate.
- The member must reconcile its revised exposure base report to independent wage or premium reports. If these conditions are met, the WCRA will calculate a revised exposure base by annualizing a member’s most recent actual six-month exposure base report.
Exposure Base Audits
The WCRA conducts internal analyses of each member’s exposure base. In addition, the WCRA periodically conducts on-site audits of the payroll reported by self-insurer members and of the premiums reported by insurer members. Any change in a member’s exposure base resulting from audit information will be reflected as an adjustment to the member’s reinsurance premium.
*Pure Premium Adjustment Factor
The number (called the pure premium adjustment factor) is an algebraic factor that corrects for variations in the exposure base over time. It allows for historical continuity and ease of comparison with the exposure base used in the WCRA's earlier years.