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Navigating PA’s New Workers’ Compensation Landscape

A recent change by the Pennsylvania Compensation Rating Bureau (PCRB) will significantly affect larger condominiums and homeowners association all across Pennsylvania with workers compensation policies. The PCRB will be revising the Pennsylvania Experience Rating Plan for the first time since 2004. The filing goes into effective for April 1, 2024, for all new and renewal policies.

What is the experience Rating Plan and why is it changing?
The purpose of the Experience Rating Plan is to forecast whether an employer will encounter better or worse loss experience compared to the average risk. It modifies standard premium by a factor designed to more equitably price plan participants or qualifying insureds. Utilizing the insured’s historical data, the Plan anticipates future losses. Under experience rating, risk’s maintaining favorable loss levels in prior years receive premium reductions (credit modifications) while those with poor past loss experience are charged increased premiums (debit modifications). Experience rating is a mandatory plan applying to all risks that qualify. Although the same basic formula will continue to be used to calculate the experience rating, the PCRB will be developing and using more actuarial solutions and data to make the rating more responsive to the specific loss experience of an insured.

Which associations will be affected? What does this mean for my association?
Starting April 1st this year, all workers compensation policies that have standard premium of $5,000 or more will now be eligible for the Experience Rating Plan. The previous premium amount was $10,000. Currently, experience modifications are capped at +/-25% swing limits. The new plan will retain only an upward swing limit of +40%. Anytime a new plan is introduced, significant changes in modification are unavoidable. To assist in navigating this significant change, there will be a two-year transition period.

It is important now more than ever for community managers to promote workplace safety. The actual rewards for controlling losses and workplace safety will be enhanced. A large workers compensation claim can have a huge impact on future workers compensation costs. Although associations cannot go back to change the past, they can influence what happens in the future. Community managers and board members should speak with a qualified risk advisor or insurance agent and workers compensation carriers to discuss possible work safety and risk management solutions. The benefits they can provide is creating a program that has the potential to make working conditions safer, install a return to work program, and lower the potential of severe and continuous claims. The goal for is this will result in the association lowering their experience modification and creating a place where people want to come and work!

Matthew Tufano is a commercial and personal lines producer for Sheeley Insurance. Matt grew up in East Stroudsburg PA and graduated from St John’s University with a degree in Risk Management & Insurance. Prior to working at Sheeley Insurance, Matt worked at a different insurance agency specifically insuring condominiums, homeowner associations, and cooperatives across Pennsylvania, New York and Ohio. Matt and his wife recently had a beautiful daughter and in addition they have a mini golden doodle named Kobe. A few of Matt’s hobbies include playing variety of sports, camping, and traveling. Matt currently serves as the chair of CAI Keystone’s P.U.L.S.E. Young Professionals Committee. He can be contacted via email at: mtufano@sheeleyinsurance.com. Learn more about Sheeley Insurance by visiting their website at: https://sheeleyinsurance.com/.