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Controlling Workers Compensation Costs for Employers

Tuesday, December 12th 2017

Last updateSun, 16 Oct 2016 2am

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Glossary

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Glossaries

Term Definition
ALAE

Allocated Loss Adjustment Expenses; expenses that can be assigned to a specific claim, such as legal fees.

AOE/COE

Arising out of Employment / In Course of Employment

AY

AY means ‘accident year’. It is the same thing as PY or ‘policy year’. This is important to differentiate from calendar year.

Caveat Emptor

Latin for "let the buyer beware." A doctrine that often places on buyers the burden to reasonably examine property before purchase and take responsibility for its condition.  [From www.law.cornell.edu]

CY

Calendar Year is the year premiums are earned or costs are paid. All premiums and costs are accounted for on cash basis.

DOI
California Department of Insurance
ICW
Insurance Company of the West – most often referred to as "ICW"
Incurred Costs

All costs of a claim – both current and future. This figure is a combination of paid costs and reserves against future costs.

Indemnity

Indemnity – an injury that causes the injured worker to lose time from work. In order to be classified as an Indemnity claim, the injured worker must receive Temporary Total Disability (TTD) or Permanent Disability (PD) payments.

MedOnly

MedOnly - an injury that required medical treatment only. There is no lost time and the injured worker doesn't receive Temporary Total Disability (TTD) or Permanent Disability (PD) payments.

Pure Premium Advisory Rates

Pure Premium Advisory Rates. These rates are 'advisory' only. They are meant to serve as a guideline for insurance carriers to help them establish their published rates.

No carrier is required to follow the advisory rates – they can publish their own rates independent of the WCIRB's rates.

PY

Policy Year is the same as Accident Year ( AY ). It is the year that the premiums are charged and all costs are incurred. All premiums and costs are accounted for on an accrual basis.

Top 50 Carriers

The Top 50 Carriers, representing over 80% of all premiums written, have rates published on the Department of Insurance web-site.

TTD

Temporary Total Disability payments. See www.avvo.com/legal-guides/ugc/what-are-ttd-tpd-ppd-ptd for more details.

Unit Stats

"Unit Stats" is a Shortened term for 'California Workers' Compensation Unit Statistical Reporting Plan – 1995'. This is the document that outlines how the insurance carriers are required to report payroll levels and losses to the WCIRB. The information is used to gather payroll and loss information that will be used, in part, to calculate the Pure Premium Advisory Rates and the Expected Losses for the Experience Modification calculation.

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