2020 Analysis of Workers' Compensation Laws - 8

A few states that do not provide permanent partial disability
benefits for certain diseases are charted under the heading
"Compensation."
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 officers 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 by
court decision. Answers depend on the provisions of the
particular laws involved and require consideration of several

8 | 2020 Analysis of Workers' Compensation Laws

2020 Analysis of Workers' Compensation Laws

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