2019 Analysis of Workers' Compensation Laws - 8

Occupational diseases usually become evident during
employment or soon after exposure. However, as with
radiation disabilities, certain diseases may be latent for a
considerable time. As Chart IV notes, most states have
extended periods in which claims may be filed concerning
latent, slowly developing occupational diseases.
Some states impose special restrictions regarding disability
resulting from exposure to coal, dust, asbestos, silica, or
radiation. A number of states have established presumptions
for police and firefighters who have heart attacks or respiratory
conditions, but no attempt is made to chart them.

Occupational Hearing Loss (Chart V)
The difficulty of distinguishing between work-related
permanent hearing loss and loss of hearing caused by
nonoccupational factors has resulted in enactment of special
provisions in certain states, as shown in Chart V. Entries
include the threshold for compensable loss of hearing,
minimum exposure requirements, and deductions for loss
caused by aging (presbycusis).

Other Considerations
* Accident Prevention-The encouragement of safety is
another basic objective of workers' compensation. The
effort to reduce the frequency and severity of work-related
injuries is accomplished in at least two ways.
First, the workers' compensation program provides employers
with preventive services, including safety engineering. This
role is assumed by casualty insurance carriers, employers,
state funds, and safety agencies. A second general role is
to provide a monetary incentive to employers to improve
their safety records. The insurance premium structure is a
primary incentive for an improved safety record.
Costs of accident-prevention services are included in
workers' compensation insurance premiums. Casualty
insurance engineers help in setting up accident-prevention
programs. Such programs contribute to lower insurance
rates, increased production efficiency, and better use of
manpower. Of course, the greatest benefit is the strong
decrease in industrial accidents by the effective lossprevention engineering methods.
* Ratemaking Service Organizations-Premium rates for
workers' compensation insurance are compiled scientifically.
Accident experience throughout the U.S. business
community is collected by data service organizations.
Member companies of these organizations report expenses
incurred under workers' compensation policies.
In states that follow the traditional process for establishing
rates, the data organization prepares a statistical analysis

that includes a manual rate. The manual rate incorporates
factors that cover claims costs (loss costs), taxes and
assessments, expenses, and profit. In other states, the
statistical analysis prepared by the data organization
typically includes only the portion of the rate that covers
loss costs and taxes, and each insurer is individually
responsible for preparing its own final rates. In these
states, the statistical organization prepares a manual rate
only for employers insured through an assigned risk pool
or similar residual market mechanism. Whether a state uses
a final rate or loss costs system, the statistical analysis based
on collective activity is subject to review by each state's
insurance regulatory authority to assure that rates are not
excessive, inadequate, or unfairly discriminatory.
Once overall rates are established, they are applied under a
uniform classification system that groups employers by the
level of hazard associated with their type of employment.
In addition, the uniform experience rating plan provides
a price adjustment for each employer based on the
actuarially predictive value of its own claims history. All
but the smallest employers are subject to experience rating,
which furnishes direct monetary incentive for safety and
prompt reemployment. Most states also permit other
forms of pricing adjustments, such as retrospective rating,
deductible plans, discounts, and loss-sensitive dividend
plans.
Manuals prepared by data organizations are standard with
all insurance companies writing business in each state
where such organizations are licensed. These manuals set
forth rules, procedures, and rates of loss costs applicable to
workers' compensation insurance. Revised compensation
rates and supporting data are filed annually with it; often,
public hearings are held before rates are revised. All states
now provide for rate regulation by state authority. In
Canada, rates are in the form of an assessment established
by each provincial compensation board annually by class
of risk. As set forth in these manuals, compensation rates
are based on payroll. Usually, only an estimated premium
is collected when the policy is written. After the policy
expires, a payroll audit is required. The actual premium is
then figured and adjustments made.
* Injuries Outside the Jurisdiction-Frequently, when
a worker's occupation takes the worker into another
jurisdiction, questions arise as to which law determines
compensation payable. In effect, most compensation
laws are extraterritorial either by specific provisions or
court decision. Answers depend on the provisions of the
particular laws involved and require consideration of several
circumstances, such as the place and nature of employment,
the place where the contract was made, the employee's
residence, and the employer's place of business.

8 | 2019 Analysis of Workers' Compensation Laws
2019 Analysis of Workers' Compensation Laws

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