1Amending the act of June 2, 1915 (P.L.736, No.338), entitled, as
2reenacted and amended, "An act defining the liability of an
3employer to pay damages for injuries received by an employe
4in the course of employment; establishing an elective
5schedule of compensation; providing procedure for the
6determination of liability and compensation thereunder; and
7prescribing penalties," in insurance rates, further providing
8for rating process.

9The General Assembly of the Commonwealth of Pennsylvania
10hereby enacts as follows:

11Section 1. Section 707 of the act of June 2, 1915 (P.L.736,
12No.338), known as the Workers' Compensation Act, reenacted and
13amended June 21, 1939 (P.L.520, No.281), amended or added July
142, 1993 (P.L.190, No.44) and June 24, 1996 (P.L.350, No.57), is
15amended to read:

16Section 707. (a) Each workers' compensation insurer shall
17be a member of a rating organization. Each workers' compensation
18insurer shall adhere to the policy forms filed by the rating
19organization.

20(b) (1) Every workers' compensation insurer shall adhere to

1the uniform classification system and uniform experience rating
2plan filed with the commissioner by the rating organization to
3which it belongs: Provided, That the system and plan have been
4approved by the commissioner as part of the approval of the
5rating organization's most recent filing for the provision for
6claim payment.

7(2) (i) Subject to the conditions of this paragraph, an
8insurer may develop subclassifications of the uniform
9classification system upon which a rate may be made.

10(ii) Any subclassification developed under subparagraph (i)
11shall be filed with the rating organization and the commissioner
12thirty (30) days prior to its use.

13(iii) If the insurer fails to demonstrate that the data
14produced under a subclassification can be reported in a manner
15consistent with the rating organization's uniform statistical
16plan and classification system, the commissioner shall
17disapprove the subclassification.

18(c) Every workers' compensation insurer shall record and
19report its workers' compensation experience to a rating
20organization as set forth in the rating organization's uniform
21statistical plan approved by the commissioner.

22(d) (1) Subject to the approval of the commissioner, a
23rating organization shall develop and file rules reasonably
24related to the recording and reporting of data pursuant to the
25uniform statistical plan, the uniform experience rating plan and
26the uniform classification system.

27(2) Every workers' compensation insurer shall adhere to the
28approved rules and experience rating plan in writing and
29reporting its business.

30(3) An insurer shall not agree with any other insurer or

1with a rating organization to adhere to rules which are not
2reasonably related to the recording and reporting of data
3pursuant to the uniform classification system or the uniform
4statistical plan.

5(e) The experience rating plan shall have as a basis:

6(1) reasonable eligibility standards;

7(2) adequate incentives for loss prevention;

8(3) sufficient premium differential so as to encourage
9safety; [and]

10(4) predictive accuracy[.];

11(5) no limit to the number of years that experience ratings
12can be revised because:

13(i) loss value was included or excluded through mistake or
14other error of judgment;

15(ii) a claim or part of a claim is noncompensable;

16(iii) a claimant or carrier has recovered in an action
17against a third party; or

18(iv) of other criteria established by rating organization;
19and

20(6) a requirement that the insurer reimburse the employer
21for any additional premium resulting from a revision of the
22experience rating.

23(f) (1) The uniform experience rating plan shall be the
24exclusive means of providing prospective premium adjustment
25based upon measurement of the loss producing characteristics of
26an individual insured.

27(2) An insurer may file a rating plan that provides for
28retrospective premium adjustments based upon an insured's past
29experience.

30(g) The commissioner shall promulgate a plan by which all

1insurers writing workers' compensation insurance in this
2Commonwealth shall grant premium discounts or assess premium
3surcharges to employers who do not qualify for the uniform
4experience rating plan in accordance with the following:

5(1) An employer who has not experienced a compensable
6employe lost-time injury during the most recent two-year period
7for which statistics are available shall receive a discount of
8five per centum on the amount of the workers' compensation
9insurance premium.

10(2) An employer who has experienced two or more compensable
11employe lost-time injuries during the most recent two-year
12period for which statistics are available shall be assessed a
13surcharge of five per centum on the amount of the workers'
14compensation insurance premium.

15(3) The premium discounts or premium surcharges established
16under this section shall be made on an annual basis but shall
17not be cumulative: Provided, however, That an employer is
18entitled to receive the premium discount provided by this
19section in addition to any other reductions or deviations in the
20insurance premiums available to all other nonexperienced-rated
21employers in the same classification. For any annual workers'
22compensation premium, an employer shall not receive a premium
23discount of more than five per centum and shall not be required
24to pay a surcharge of more than five per centum.

25(4) Insurers writing workers' compensation insurance in this
26Commonwealth may file a schedule rating plan based upon defined
27risk characteristics. Prior approval of this plan by the
28commissioner is required.

29For purposes of this clause, "employer" shall include a
30municipality or a municipal pool.

1Section 2. The amendment of section 707 of the act shall
2apply to experience rating disputes initially initiated on or
3after the effective date of this section.

4Section 3. This act shall take effect in 30 days.