Exposure

Insurers: Exposure base for insurer members is calendar year earned premium at the MWCIA designated statistical reporting level less premium for employer’s liability increased limits.

The WCRA obtains data on earned premiums for regular plus large deductible business from the member and from the Annual Call for Experience that members submit to the MWCIA. Experience rating modifications of the insurers’ individual policyholders are incorporated within the earned premium at designated statistical reporting level data.

Self-Insurers: Exposure base is determined by multiplying Minnesota workers’ covered payroll by classification by the MWCIA pure premium class rates. The result is then multiplied by the experience rating modification factor (See FAQ – How is a self-insurer’s experience mod calculated?). The payroll by classification is taken from the Minnesota payroll reported each year by members on the WCRA electronic reporting site.

Before estimating member premiums, the WCRA first calculates the ratio of total projected exposure for the coming year to total reported exposure figures (available from two years prior). The resulting factor is then applied to each member’s exposure base from two years prior to calculate the estimated exposure base.

When the WCRA initially calculates estimated exposure for a member, it uses the most recent, actual exposure figures available. Generally, the actual exposure amount from the most recently completed calendar year is used by the WCRA to estimate exposure for the coming year. For example, estimated exposure for 2023, calculated in December 2022, would use actual exposure amounts from calendar year 2021. A WCRA member may request that its estimated exposure base be revised to better reflect current premium or payroll levels, if two requirements are met.

1. The member’s revised estimated exposure base must be at least 15 percent greater or less than the original estimate.

2. The member must provide a revised exposure base report with corroborating documentation to substantiate the requested revision.

If these conditions are met, the WCRA will calculate a revised exposure base and adjust the premiums calculated accordingly.

The WCRA requires members to annually self-report exposure base data for review to update members’ exposure base from estimated to actual. The WCRA routinely performs virtual or onsite audits to obtain sufficient information to validate member-reported data. Any change in a member’s exposure based resulting from audit information will be reflected as an audit adjustment to the member’s reinsurance premium.

Starting with the 2023 premium year, the pure premium adjustment factor has been removed.

The adjustment factor of 1.20 was added in 1984 to keep consistency in WCRA’s exposure base when MWCIA switched from a fully loaded rate approach to pure premium class rates. This uniform factor, when multiplied by the schedule of pure premium class rates effective for 1984 and thereafter, results in rates that reasonably approximate the schedule of manual rates effective as of February 1, 1983. Starting January 1, 2023, pure premium class rates developed by MWCIA were updated to include loss expense, trending to the average accident date, and development to ultimate. As a result of these changes, the adjustment factor of 1.20 is removed from the exposure base calculation for premium years 2023 and forward.