COMPENSATION RATING AND INSPECTION BUREAU

Transcription

1 COMPENSTION RTING ND INSPECTION BUREU GROVER E. CZECH, ESQ. Executive Director STTE OF NEW JERSEY DEPRTMENT OF BNKING ND INSURNCE 60 PRK PLCE, NEWRK, NJ (973) LOUIS. (TONY) GEORGES ssociate Executive Director MNUL MENDMENT BULLETIN #415 June 3, 2002 To ll Bureau Members and Subscribers: Re: Employee Leasing Large Risk Large Deductible Program Experience Rating Plan Retrospective Rating Plan The Commissioner of Banking and Insurance has approved the following changes to the New Jersey Workers Compensation and Employers Liability Insurance Manual, effective July 1, Employee Leasing legislative amendment to N.J.S.. 34:8 became effective December 6, 2001 requiring the registration of Professional Employee Organizations (PEO) or employee leasing companies with the New Jersey Department of Labor. The amendment further required extension of the exclusive remedy provision of the Workers Compensation Law to the PEO or leasing company and a client entity. In instances where a client secures its own workers compensation policy, a gap in coverage is created as respects to the PEO or leasing company. In order to close the potential gap in coverage, a new endorsement, WC New Jersey lternate Employer Endorsement, has been approved which provides for the naming of the PEO or leasing company as the lternate Employer in qualifying circumstances. copy of the new endorsement is included in Exhibit. ddition of the new endorsement also requires a change to the Manual to provide direction for its use. Exhibit B includes the changes to 3:10-2 of the Manual to accommodate this change. s a result of this action, Endorsement WC lternate Employer Endorsement is no longer applicable and is hereby discontinued. Large Risk Large Deductible Program The present eligibility for the Large Risk - Large Deductible Program is $500,000 of New Jersey or countrywide estimated annual standard premium. The eligibility criteria in jurisdictions adjoining New Jersey and in most other states are considerably less. In order to make the Program more available and to provide for consistency among jurisdictions the present eligibility criteria has been changed to $200,000 of New Jersey or countrywide estimated annual standard premium. The change is applicable to all Programs except those involving Large Construction Projects. The present eligibility of $500,000 remains unchanged for Programs involving Large Construction Projects. The minimum deductible amount in adjoining jurisdictions is also considerably less than the present New Jersey amount of $100,000. To provide for consistency and to make deductible amounts available that involve less assumption of risk, the minimum deductible amount has been changed to $25,000.

2 C.R.I.B. -2- Effective July 1, 2002 The present rating procedure for determination of the deductible premium in a Large Risk - Large Deductible Program utilizes rating values from the Retrospective Rating Plan as well as industry averages for expense elements. The procedure does not provide for recognition of the unique exposures and characteristics of an insured qualifying for the Program. In order to provide for that recognition, the rating procedure for determining the deductible premium has been eliminated. The deductible premium will now be determined on the basis of negotiation between insured and insurer. Exhibit C includes changes to 3:10 of the Manual, which are necessary to accommodate the amendments to the Program. Exhibit D contains a revised Notice of Election, form NJ LR-LD (3rd Rev.), which also must change due to the amendments (second page of the form, the calculation of deductible premium, has been eliminated). Lastly, Exhibit E contains a revised New Jersey Large Risk Large Deductible Retrospective djustment Endorsement, WC This endorsement has been revised to accommodate the change in rating procedure and must be attached to each New Jersey policy opting for a Large Risk Large Deductible Program with a Retrospective djustment. Ex perience Rating Plan The present Manual rule 3:11-16 requires calculation and inclusion of a normal (artificial) loss record in experience ratings when unit statistical reports are not filed due to insurer retirement or insolvency. Concern for the results produced by using artificial data along with the growing number of insurer insolvencies has prompted a change in the Manual provision. The present and revised rules are as follows: 16. Unavailable Experience. ny risk, part of whose experience has become unavailable through the insolvency or retirement of one or more insurance carriers, shall be judged as to its eligibility for experience rating upon such other authentic experience as may be developed in accordance with the rules of this Plan. ny risk which then so qualifies shall be credited with a normal loss record throughout the period of the unavailable experience and the measure of exposure for the period shall be taken as pro rata of the acceptable experience under the rules of this Plan. REVISED 16. Unavailable Experience. ny risk, part of whose experience has become unavailable through the insolvency or retirement of one or more insurance carriers, shall be judged as to its eligibility for experience rating upon such other authentic experience as may be developed in accordance with the rules of this Plan. n experience rating shall be promulgated for any risk, which qualifies based on the available experience. If the entire experience of any risk becomes unavailable through the insolvency or retirement of one or more insurance carriers manual premium shall apply. The amendment will facilitate the experience rating process when unit statistical reports are unavailable due to the insolvency or retirement of insurers by eliminating the artificially determined data. Retrospective Rating Plan The eligibility for the Retrospective Rating Large Risk lternative Rating Option has changed from $250,000 of New Jersey or countrywide estimated annual standard premium to $200,000. This change is to provide for consistency with the previously mentioned reduction in the eligibility criteria of the Large Risk - Large Deductible Program. Both the Large Risk lternative Rating Option and the Large Risk - Large Deductible Program are similar in many respects.

3 C.R.I.B. -3- Effective July 1, 2002 Exhibit F includes changes to 3:12-1 of the Manual, which are necessary to accommodate the change in eligibility for the Large Risk lternative Rating Option. * * * * * With respect to the endorsements in Exhibit and Exhibit E your attention is called to 3:2-1 of the Manual wherein it is stipulated that the initial copy intended for use must be filed in duplicate with the Rating Bureau and written approval secured before being placed in use. Please note that the Endorsement in Exhibit E will not be approved unless the alphabetic version identifier is included with the standard identification number. revised Policy Forms and Endorsements Index is provided in Exhibit G. GEC:njl tt. Grover E. Czech, Esq. Executive Director

4 C.R.I.B. -4- Effective July 1, 2002 EXHIBIT WORKERS COMPENS TIO N ND EMPLO YERS LIBILITY INS URNC E PO LIC Y WC NEW JERSEY LTERNTE EMPLO YER ENDO RSEMENT This endorsement applies only with respect to bodily injury to your employees while in the course of special or temporary employment by the alternate employer in the state named in Item 2 of the Schedule. Part One (Workers Compensation Insurance) and Part Two (Employers Liability Insurance) will apply as though the alternate employer is insured. If an entry is shown in Item 3 of the Schedule, the insurance afforded by this endorsement applies only to work you perform under the contract or at the project named in the Schedule. Under Part One (Workers Compensation Insurance) we will reimburse the alternate employer for the benefits required by the workers compensation law if we are not permitted to pay the benefits directly to the persons entitled to them. The insurance afforded by this endorsement is not intended to satisfy the alternate employer s duty to secure its obligations under the workers compensation law. We will not file evidence of this insurance on behalf of the alternate employer with any government agency. We will not ask any other insurer of the alternate employer to share with us a loss covered by this endorsement. Premium will be charged for your employees while in the course of special or temporary employment by the alternate employer. The policy may be canceled according to its terms without sending notice to the alternate employer. Part Four (Your Duties If Injury Occurs) applies to you and the alternate employer. The alternate employer will recognize our right to defend under Parts One and T wo and our right to inspect under Part Six. Schedule 1. lternat e Employer ddress 2. State of Special or Temporary Employment 3. Contract or Project This endorsement changes the policy to which it is attached and is effective on the date issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparation of the policy.) Endorsement Effective Policy No. Endorsement No. Insured Premium $ Insurance Company Countersigned by Notes: 1. This endorsement may be used when the insured named in Item 1 of the Information Page has agreed to provide insurance against workers compensation and employers liability claims made by employees of the insured against a special or temporary employer named in the endorsement Schedule. 2. This endorsement may be used only if the st at e of temporary or special employment is a st at e shown in It em 3.. of the Information Page.

5 C.R.I.B. -5- Effective July 1, 2002 EXHIBIT (Cont'd 3. If the insured is in the business of providing temporary workers for others, the insurer may show the alternate employers in the Schedule by the words all or any. 4. If the insured is a client of a Professional Employer Organization (PEO), maintaining independent Workers Compensation coverage, the insurer must show the name and address of the PEO in Item 1 of the Schedule. 5. Four uses of this endorsement are illustrated here: a. Use this endorsement if the policy is issued to a contractor (the insured) who is required by an oil company (as alternate or special employer) to provide workers compensation and employers liability insurance to protect the oil company from claims brought by the contractor s employees. b. Use this endorsement if the policy is issued to a business that operates and manages property for others (the insured) who is required by the property owner (the alternate employer) to provide this insurance to protect the owner from claims brought by employees of the operator/manager. c. Use this endorsement if the policy is issued to a supplier of temporary office help (the insured) who is required by its customer (the user of the temporary office help the alternate employer) to provide this insurance to protect the customer from claims brought by the insured s employees against the alternate employer. d. Use this endorsement if the policy is issued to a client of a PEO where the client maintains Workers Compensation coverage independent of any other services provided by the PEO, to provide this insurance to protect the PEO from claims brought by the co-employees against the alternate employer. 6. Show an appropriate entry to Item 3 to limit the endorsement to apply only to specific jobs or contracts of the insured Compensation Rating and Inspection Bureau Includes copyrighted information of the National Council on Compensation Insurance, Inc. 1984, 1988 National Council on Compensation Insurance, Inc.

6 C.R.I.B. -6- Effective July 1, 2002 EXHIBIT B EMPLOYEE LES ING mend Part 3 Section 10 as follows: 2. Policy Writing a. Labor Contractor/Client Policy. Each insurance company affording coverage for a labor contractor must issue a separate policy identifying each client of the labor contractor. Item 1 of the Information Page must include the name of the labor contractor as the insured and identify the client as follows: BC Leasing Company L/C/F XYZ Machine Shop; Where L/C/F refers to Labor Contractor For. Each policy shall expire on the same date. Such policy shall not include coverage for non-leased workers of the client or direct employees of the labor contractor. Each policy shall include endorsement WC , New Jersey Employee Leasing Labor Contractor Endorsement. REVISED Each policy will be sent to the Labor Contractor as the named insured. b. Separate Policy For Client. It shall be the obligation of the client to provide coverage for any non-leased workers and/or to provide contingency coverage for leased workers. Such policy shall include endorsement WC New Jersey Employee Leasing Client Exclusion Endorsement. c. Separate Policy For Labor Contractor. separate policy shall be issued in the name of the labor contractor to provide coverage for direct employees of such labor contractor. The policy shall include endorsement WC New Jersey Employee Leasing Labor Contractor Exclusion Endorsement. d. Client Maintaining Inde pe ndent Co- Employer Policy. The insurance carrier providing coverage to a client engaged in a coemployment relationship with a Professional Employer Organization (PEO) as defined in N.J.S.. 34:8-1, et. seq., where the client has elected to maintain Workers Compensation coverage independent of any other contractual agreements between the parties, shall attach an appropriately completed New Jersey lternate Employer Endorsement ( WC ) naming the PEO as an alternate employer as respects the contractual co-employer relationship.

7 -7- EXHIBIT C LRGE RIS K-LRGE D EDUCTIBLE PROGRM mend Part 3 Section 10 as follows: 1. General. The Large Risk - Large Deductible Program offers an employer many of the advantages of self-funding a workers compensation program without the associated disadvantage of self-administration. In addition, it provides the same guarantees to an injured worker that the traditional insurance program would. Thus the insurer s liability to an injured worker is unaffected by this program. In recognition of the expected reimbursement of losses by the insured, a premium reduction is received as illustrated in paragraph 7 below. Where further adjustment of this premium is desired, refer to the elective procedure in paragraph 10. The adjustment may result in an increase or decrease in the deductible premium, depending upon the insured s actual losses. 4. mounts. The minimum deductible is $100,000 per accident or per employee. Higher amounts are available in increments which correspond to those listed for Excess Loss Factors in 2:6-3 of this Manual. limit in excess of 40% of the estimated annual standard countrywide workers compensation premium is not permitted. This rule does not apply to the policy period aggregate limit. 5. Eligibility/pproval. Except as provided in 3 above, a minimum of $500,000 of New Jersey estimated annual standard workers compensation premium is required. If the New Jersey premium is less than $500,000, the employer will qualify if its countrywide workers compensation premium is at least $500,000. pproval is obtained through the receipt of a completed Notice of Election by this Bureau, within sixty days after the effective date of the Large Risk Large Deductible Program. sample of the Notice is included at the end of this section of the Manual. REVIS ED 1. General. The Large Risk - Large Deductible Program offers an employer many of the advantages of self-funding a workers compensation program without the associated disadvantage of self-administration. In addition, it provides the same guarantees to an injured worker that the traditional insurance program would. Thus the insurer s liability to an injured worker is unaffected by this program. In recognition of the expected reimbursement of losses by the insured, a premium reduction is received. Where further adjustment of this premium is desired, refer to the elective option in paragraph 10. The adjustment may result in an increase or decrease in the deductible premium, depending upon the insured s actual losses. 4. mounts. The minimum deductible is $25,000 per accident or per employee. limit in excess of 40% of the estimated annual standard countrywide workers compensation premium is not permitted. This rule does not apply to the policy period aggregate limit. 5. Eligibility/pproval. Except as provided in 3 above, a minimum of $200,000 of New Jersey estimated annual standard workers compensation premium is required. If the New Jersey premium is less than $200,000, the employer will qualify if its countrywide workers compensation premium is at least $200,000. cknowledgement is obtained through the receipt of a completed Notice of Election by this Bureau, within sixty days after the effective date of the Large Risk Large Deductible Program. sample of the Notice is included at the end of this section of the Manual.

8 -8- EXHIBIT C (Cont'd) 7. Rating Procedure. The deductible premium is calculated in accordance with the following procedure: Formula Expected Losses Fixed bove Expense ggregate Deductible = Deductible Charge + Limit Premium 1-Variable Expense Ratio Charge. Expected Losses bove Deductible 1. Estimated Countrywide nnual Standard Premium 2. Expected Loss Ratio (see 2:7-1 of this Manual) 3. Expected Losses (1 x 2) 4. Deductible mount 5. ELF for Deductible (2:6-3 of this Manual) 6. Retrospective Rating ELR (2:6-6 of this Manual) 7. Excess Loss Pure Premium Factor (5-6) 8. Expected Losses bove Deductible (3 x 7) B. ggregate Limit Charge 1. Charge for countrywide aggregate limit to be determined between insurer and insured. C. Fixed Expense Charge 1. Estimated Countrywide nnual Standard Premium (1) 2. Expected Losses (3) 3. Claim Expense (C2 x LE Factor from 2:7-1) 4. Other Fixed Expenses (C1 x OFE from 2:7-1) 5. Fixed Expense Charge (C3 + C4) D. Variable Expense Ratio 1. cquisition, Profit and Contingencies Ratio* 2. Tax Ratio** 3. Variable Expense Ratio (D1 + D2) REVIS ED 7. Rating Procedure. The deductible premium is determined on the basis of negotiation between insured and insurer. * Value to be determined between insurer and insured. ** Tax Ratio [1.00 (1.0 N.J. state tax multiplier in 2:6-5 of this Manual)]. E. Deductible Premium 1. Expected Losses bove Deductible (8) 2. Fixed Expense Charge (C5) 3. Subtotal (E1 + E2) 4. Variable Expense Ratio (D3) 5. Countrywide Deductible Premium prior to ggregate Limit Charge, if any, [E3 (1.0 E4) 6. ggregate Limit Charge, if any, (B1)* 7. Total Countrywide Deductible Premium (E5 + E6) 8. Estimated New Jersey nnual Standard Premium 9. New Jersey Deductible Premium [(E7 1) x E8] * Charge for countrywide aggregate limit to be determined between insurer and insured.

9 -9- EXHIBIT C (Cont'd) Definitions. Expected Losses bove Deductible Component of the deductible premium to cover losses (and LE, if applicable) in excess of the deductible limit. REVIS ED 1) Estimated Countrywide nnual Standard Premium (See definition of standard premium in 3:3-75 of this Manual 2) Expected Loss Ratio The standard premium expected loss ratio at current manual rates. 5) ELF for Deductible The retrospective rating excess loss factor for the loss limit selected. 6) Retrospective Rating ELR The retrospective rating expected loss ratio. B. ggregate Limit Charge Component of the deductible premium to cover the amount of losses (and LE, if applicable) expected to exceed the established aggregate limit. The amount and cost of any aggregate limit shall be determined between the insurer and insured. The cost of the aggregate limit is based on the countrywide premium which includes the New Jersey estimated annual standard premium. In those cases where there is New Jersey premium only, such premium shall represent the countrywide premium. C. Fixed Expense Charge Component of the deductible premium to cover expenses which do not vary with the final premium. This includes nonreimbursed loss adjustment expense, audit expense, loss prevention, other general expenses. C4) Other Fixed Expenses General expenses (e.g., loss prevention, audit, etc.). D. Variable Expense Ratio Component of deductible premium which loads the losses expected to exceed the deductible and fixed expense charge for expenses which are expected to be a function of the final deductible premium. This includes acquisition expense, taxes, assessments, profit and other contingencies. E. Deductible Premium Premium charged to the policyholder to workers compensation deductible coverage. C6) Component of the deductible premium to cover the amount of losses (and LE if applicable) expected to exceed the established aggregate limit.

10 -10- EXHIBIT C (Cont'd) REVIS ED Ex ample Estimated Countrywide nnual Standard Premium...750,000 Estimated New Jersey nnual Standard Premium...150,000 Per ccident/disease Deductible...100,000 Countrywide ggregate Limit...900,000 ggregate Limit Charge Countrywide... 20,000 Hazard Group.... Expected Losses bove Deductible 1. Estimated Countrywide nnual Standard Premium...750, Expected Loss Ratio Expected Losses (1 x 2)...561, Deductible mount...100, ELF for Deductible Retrospective Rating ELR Excess Loss Pure Premium Factor (5 6) Expected Losses bove Deductible (3 x 7)...248,888 B. Countrywide ggregate Limit Charge 1. Charge per Countrywide ggregate to be Determined Between insurer and insured. 20,000 C. Fixed Expense Charge 1. Estimated Countrywide nnual Standard Premium (1)...750, Expected Losses (3)...561, Claim Expense (C2 x LE Factor)... 33, Other Fixed Expenses (C1 x OFE)... 37, Fixed Expense Charge (C3 + C4)... 71,210 D. Variable Expense Ratio 1. cquisition Ratio and Profit & Contingency Ratio Tax Ratio Variable Expense Ratio (D1 + D2) E. Deductible Premium 1. Expected Losses bove Deductible (8)...248, Fixed Expense Charge (C5)... 71, Subtotal (E1 + E2)...320, Variable Expense Ratio (D3) Countrywide Deductible Premium Prior to ggregate Limit Charge, If any, [(E3) (1.00) - (E4))]...374, ggregate Limit Charge Countrywide (B , Total Countrywide Deductible Premium (E5+E6)...394, Estimated nnual New Jersey Standard Premium...150, New Jersey Deductible Premium [(E7 1) x (E8)]... 78,859

11 -11- EXHIBIT C (Cont'd) 9. Expense djustment. Notwithstanding the provisions of 3:10-7C of the rating procedure, the insured and insurer may agree to retroactively adjust the fixed expense charge based on actual costs. 10. Premium Discount/Retrospective djustment. Risks subject to this program are not eligible for premium discount but may elect retrospective adjustment of the deductible premium. Retrospective adjustment of the deductible premium is optional and may be elected by the insured and accepted by the carrier, in the Notice of Election cited in paragraph 5 above. Each policy to which this adjustment applies shall include the New Jersey Large Risk Large Deductible Endorsement and the New Jersey Large Risk Large Deductible Retrospective djustment Endorsement. The adjustment produces retrospective deductible premium which result s direct ly from the insured s loss experience during the term of the rating period. The loss experience will be valued according to the standard requirements of the Statistical Plan in 3:13 of this Manual. There is no minimum or maximum premium factor applicable to this adjustment. The inclusion of a policy aggregate, however, may limit the amount of reimbursement loss which, in turn, would affect the retrospective deductible premium payable by the insured. The retrospective adjustment of the deductible premium shall be determined by the carrier according to the formula below, during the sixth month after the end of the rating period. djustments based on subsequent valuations of loss experience at twelve-month intervals will continue to be made by the carrier unless the carrier and the insured agree that the latest adjustment is final. The adjustment accepted as final shall not be reopened or revised for any reason except those listed in 3:12-24 of this Manual. The carrier or the insured may request this Bureau to verify the calculation of any adjustment. REVIS ED 9. Premium Discount/Retrospective djustment. Risks subject to this program are not eligible for premium discount but may elect retrospective adjustment of the deductible premium. Retrospective adjustment of the deductible premium is optional and may be elected by the insured and accepted by the carrier, in the Notice of Election cited in paragraph 5 above. Each policy to which this adjustment applies shall include the New Jersey Large Risk Large Deductible Endorsement and the New Jersey Large Risk Large Deductible Retrospective djustment Endorsement. T he method to determine the retrospective adjustment of the deductible premium must be agreed to by insured and carrier at the time of election of the program. The retrospective adjustment of the deductible premium shall be determined by the carrier during the sixth month after the end of the rating period. djustments based on subsequent valuations of loss experience at twelve-month intervals will continue to be made by the carrier unless the carrier and the insured agree that the latest adjustment is final. The adjustment accepted as final shall not be reopened or revised for any reason except those listed in 3:12-24 of this Manual.

12 -12- EXHIBIT C (Cont'd) Formula (Countrywide Deductible Basic Premium Factor x Countrywide Deductible Premium and Carrier ssumed Loss x Deductible Tax and Expense Ratio + (Countrywide Reimbursable Losses x Deductible Loss Conversion Factor + (ggregate Limit Charge, if applicable) REVIS ED Definitions Countrywide Deductible Basic Premium Factor= ELPPFxELRx(1.000+DLCF) Deductible Ratio ELPPF (Excess Loss Pure Premium Factor) = (7) ELR (Expected Loss Ratio) = (2) DLCF (Deductible Loss Conversion Factor) = (C5)/(3) Deductible Ratio = ((8) + (E5))/(1) Countrywide Tax and Expense Ratio = 1.000/(1.00 (D3)) Countrywide Reimbursable Losses are losses payable by the insured. llocated Loss djustment Expenses are to be included in the reimbursable losses if the Deductible Program selected includes these expenses. Where an ggregate Limit has been elected, the reimbursable losses cannot exceed the ggregate Limit amount. Deductible Loss Conversion Factor = (C5)/(3) ggregate Limit Charge (B1) Example (Continuation of Example Calculation in through E above) F. Retrospe cti ve Dedu cti ble Premium 1. Excess Loss Pure Premium Factor (7) Expected Loss Ratio (2) Deductible Loss Conversion Factor C5)/(3) Deductible Ratio [(8) + (E5)]/(1) Countrywide Deductible Basic Premium Factor [(F1)x(F2)x(1.000+F3)]/(F4) Countrywide Deductible Premium and Carrier ssumed Losses (E5)+(8)...623, Deductible Tax and Expense Ratio 1.000/[1.000-(D3)]

13 -13- EXHIBIT C (Cont'd) 8. Countrywide Reimbursable Losses...312, Total Countrywide Retrospective Deductible Premium [(F5) x (F6) x (F7)] + ggregate Limit Change (B1)...394, udited New Jersey nnual Standard Premium...750, udited New Jersey nnual Standard Premium...150, New Jersey Retrospective Deductible Premium [(F9)/(F10)] x (F11)...78,857 REPO RTING REQ UIREMENT 11. Policy Pre paration. The calculated deductible premium credit (standard premium minus deductible premium) for the selected deductible(s) shall be entered in Item 4 of the Information Page immediately below the total estimated standard premium entry. Each policy to which this coverage applies shall include the New Jersey Large Risk Large Deductible Endorsement, where elected, the New Jersey Large Risk Large Deductible Retrospective djustment Endorsement. 12. Unit Statistical Reporting. It is required that gross incurred losses, prior to the application of the deductible, be reported under the Statistical Plan. Total payrolls and audited standard premiums shall also be reported. Total payrolls and losses are to be used in the experience ratings of t he employers and in classificat ion experience. The calculated or retrospective adjusted deductible premium credit (standard premium minus deductible premium) for the selected deductible(s) shall be reported and, if necessary, revised in subsequent reports under the appropriate statistical code as indicated in 3: of this Manual. 13. Financial Reporting. Case estimates are required by established procedures. Premiums and losses are to be reported separately on a gross and first dollar basis, respectively. lso to be reported are premiums net of the calculated deductible premium credit and incurred losses in excess of the deductible. T he detailed requirements are included in the instructions which accompany the call for financial data. REVIS ED REPO RTING REQ UIREMENT 10. Policy Preparation. The deductible premium credit (standard premium minus deductible premium) for the selected deductible(s) shall be entered in Item 4 of the Information Page immediately below the total estimated st andard premium entry. 11. Unit Statistical Reporting. It is required that gross incurred losses, prior to the application of the deductible, be reported under the Statistical Plan. Total payrolls and audited standard premiums shall also be reported. Total payrolls and losses are to be used in the experience ratings of t he employers and in classificat ion experience. The deductible premium credit or retrospective adjusted deductible premium credit (standard premium minus deductible premium) for the selected deductible(s) shall be reported and, if necessary, revised in subsequent reports under the appropriate statistical code as indicated in 3: of this Manual. 12. Financial Reporting. Case estimates are required by established procedures. Premiums and losses are to be reported separately on a gross and first dollar basis, respectively. lso to be reported are premiums net of the deductible premium credit and incurred losses in excess of the deductible. The detailed requirements are included in the instructions which accompany the call for financial data.

14 C.R.I.B Effective July 1, 2002 EXHIBIT D NEW JERSEY LRGE RISK LRGE DEDUCTIBLE PROGRM NOTICE of ELECTION Compensation Rating and Inspection Bureau 60 Park Place Newark New Jersey Date The undersigned certify that the named insured has elected and the carrier has accepted this New Jersey Large Risk- Large Deductible Program. The name and address of the insured subject to this rating program is as follows. The use of etal is not acceptable (Name and ddress) (Policy Number(s)) (Effective From) (To) 3. Total Estimated New Jersey nnual Workers Compensation Standard Premium $ 4. Total Estimated Countrywide nnual Workers Compensation Standard Premium, including the premium in Item 3 above (Where there is NJ premium only, enter the premium in Items 3 and 4) 5. Deductible amount $ each accident or each employee. (Dollar mount) 6. Countrywide ggregate Limit $ 7. llocated Loss djustment Expenses are (Dollar mount or None) ( Included or Excluded ) 8. The Deductible Premium be subject to retrospective adjustment. ( Will or Will Not ) 9. Total New Jersey Deductible Premium $ 10. Total Countrywide Deductible Premium $ 11. The entire New Jersey operations of the insured are included except It is understood by the insured and this insurance carrier that this New Jersey Large Risk-Large Deductible Program is not available unless the Rating Bureau receives this notification of the election and acceptance of this New Jersey Large Risk-Large Deductible Program within sixty days after the beginning of the rating period, in complete detail as required by this form and the applicable Manual rule. 12. (Name of Insurance Carrier) 13. Signed Printed 14. Signed (Carrier) (Carrier) (Title) (ddress) (Insured) (Title) (ddress) Form NJ LR-LD(3 rd Rev) Compensation Rating and Inspection Bureau

15 -15- EXHIBIT E WORKERS COMPENS TIO N ND EMPLO YERS LIBILITY INS URNC E PO LIC Y WC NEW JERSEY LRGE RISK LRGE DEDUCTIBLE RETROS PEC TIVE DJUS TMEN T ENDO RS EMEN T This endorsement changes the New Jersey Large Risk Large Deduct ible Endorsement attached to the policy. 1. You have agreed to the New Jersey Large Risk Large Deductible Program under the New Jersey Large Risk Large Deduct ible Endorsement. 2. You have further agreed to retrospective adjustment of the deductible premium. The adjustment produces retrospective deductible premium which results directly from your loss experience during the term of the rating period. The loss experience will be valued according to the standard requirements of the New Jersey Statistical Plan. There is no minimum or maximum premium factor applicable to this adjustment. The inclusion of a policy aggregate, however, may limit the amount of reimbursable loss which, in turn, would affect the retrospective deductible premium payable by you. 3. The retrospective adjustment of the deductible premium will be determined by us during the sixth month after the end of the rating period. djustments based on subsequent valuations of loss experience at twelve month intervals will continue to be made by us until we and you agree that the latest adjustment is final except where: (a) Loss values are included or excluded through mistakes other than error or of judgment. (b) The claimant has recovered in an action against at third party. (c) The claim has been officially dismissed by judicial or appropriate departmental ruling as non-compensable, or for lack of prosecution where the statute of limitation has expired. (d) The statute of limitation has expired and the claim has been closed with no payment other than medical. (e) The settlement has been approved in accordance with R.S.N.J. 34:15-20 of the New Jersey Workers Compensation Law where the issue involves question of jurisdiction, liability, causal relationship or dependency of the petitioner. (f) The claim valued on a life pension basis has been settled on a basis other than a life pension. (g) The st andard premium has been revised. Note: This supplementary endorsement is to be attached to policies subject to the Large Risk Large Deductible Program where retrospective adjustment of the deductible premium has been elected and the New Jersey Large Risk Large Deductible Endorsement is also attached to the policy. See 3:10 of the New Jersey Manual. This endorsement changes the policy to which it is attached and is effective on the date issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparation of the policy.) Endorsement Effective Policy No. Endorsement No. Insured Premium $ Insurance Company Countersigned by Compensation Rating and Inspection Bureau

16 -16- EXHIBIT F SECTION 12. RETROSPECTIVE RTING PLN mend Part 3 Section 12 as follows: REVIS ED DESCRIPTION ND REQUIREMENTS 1. Optional Intrastate Retrospective Rating Plan. This Retrospective Rating Plan is optional and may be used upon election by the insured, acceptance by the insurance carrier and approval by this Bureau. pproval is obtained through the receipt of the completed Notice of Election of Retrospective Rating by this Bureau within sixty days after the effective dat e of the rating. The Notice appears as Form NJRR-1 (8 th Rev) at the end of this Sect ion and is explained in paragraphs 20 and 21. One or Three Year Rating Period Retrospective rating applies only to New Jersey Workers Compensation and Employers Liability Insurance on an intrastate basis and is available for a one or three year rating period to any insured, as defined in paragraph 8, with estimated annual standard premium of at least $15,000. The premium requirement for Large Construction Projects approved under the exception to paragraph 8 is $500,000 or more per project. The premium requirement for the Large Risk lternative Rating Option which is explained in the exception to paragraph 7 is $250,000 or more per year, but if such New Jersey premium is less than $250,000 and the insured s countrywide premium is $250,000 or more per year for Workers Compensat ion and Employers Liability Insurance, the countrywide premium shall qualify for the Large Risk lternat ive Rat ing Opt ion. Long-Term Rating Period Long-Te rm Construction Project. retrospect ive rating period equal to the duration of a construction or demolition project at a single location in New Jersey is available where the average annual standard premium is estimated at $100,000 or more for the project. Road projects, continuous to completion, shall be construed as meeting the qualification of a single location. letter describing the project shall accompany the Notice of Election. series of one year policies shall be written for each long-term construction project. Large Construction Projects and the Large Risk lternative Rating Option may qualify for this long-term retrospective rating period. The premium requirement for the Large Risk lternative Rating Option which is explained in the exception to paragraph 7 is $200,000 or more per year, but if such New Jersey premium is less than $200,000 and the insured s countrywide premium is $200,000 or more per year for Workers Compensat ion and Employers Liability Insurance, the countrywide premium shall qualify for the Large Risk lternat ive Rat ing Opt ion.

17 C.R.I.B Effective July 1, 2002 EXHIBIT G INDEX POLICY FORMS ND ENDORSEMENTS PPLICBLE IN NEW JERSEY STNDRD IDENTIF IER VERSION IDENTIFIER Workers Compensation and Employers Liability Insurance Policy...WC Information Page (With New Jersey Requirements)...WC B FEDERL COVERGES ND EXCLUSIONS Defense Base ct Coverage Endorsement...WC Federal Employers' Liability ct Coverage Endorsement...WC Longshore and Harbor Workers' Compensation ct Coverage Endorsement...WC Outer Continental Shelf Lands ct Coverage Endorsement...WC New Jersey Voluntary Compensation Federal Employers' Liability ct Coverage Endorsement...WC MRITIME COVERGES ND EXCLUSIONS Maritime Coverage Endorsement...WC Voluntary Compensation Maritime Coverage Endorsement...WC OTHER COVERGE ND EXCLUSIONS Designated Workplaces Exclusion Endorsement...WC Insurance Company as Insured Endorsement...WC Joint Venture as Insured Endorsement...WC Rural Electrification dministration Endorsement...WC New Jersey Workers Compensation and Employers Liability Coverage for Residence Employees Endorsement...WC New Jersey Employee Leasing Labor Contractor Endorsement...WC New Jersey Employee Leasing Client Exclusion Endorsement...WC New Jersey Employee Leasing Labor Contractor Exclusion Endorsement...WC New Jersey Part Two Employers Liability Endorsement...WC New Jersey Sole Proprietor and Partners Coverage Endorsement...WC New Jersey lternate Employer Endorsement...WC PRE MI UM nniversary Rating Date Endorsement...WC Experience Rating Modification Factor Endorsement...WC Pending Rate Change Endorsement...WC Policy Period Endorsement...WC Rate Change Endorsement...WC Premium Due Date Endorsement...WC New Jersey Premium Discount Endorsement: Schedule Y... WC New Jersey Premium Discount Endorsement: Schedule X... WC New Jersey pproved Managed Care Program Endorsement...WC New Jersey Construction Classification Premium djustment Endorsement...WC O RETROSPECTIVE PREMIUM New Jersey Retrospective Premium Endorsement - One Year Rating Period...WC New Jersey Retrospective Premium Endorsement - Three Year Rating Period...WC New Jersey Retrospective Premium Endorsement Renewal Policies - Three Year or Long Term Rating Period...WC New Jersey Retrospective Premium Endorsement viation Exclusion...WC New Jersey Retrospective Premium Endorsement Non-Ratable Catastrophe Element...WC New Jersey Retrospective Premium Endorsement Short Form...WC New Jersey Retrospective Premium Endorsement Part Two Employers Liability Insurance Excess Exclusion...WC New Jersey Retrospective Premium Endorsement - Long Term Construction Project...WC New Jersey Retrospective Premium Endorsement - Large Risk lternative Rating Option - One Year Rating Period...WC New Jersey Retrospective Premium Endorsement - Large Risk lternative Rating Option - Three Year Rating Period...WC New Jersey Retrospective Premium Endorsement - Large Risk lternative Rating Option Long Term Construction Project...WC New Jersey Large Risk - Large Deductible Endorsement...WC New Jersey Large Risk - Large Deductible Retrospective djustment Endorsement...WC B B C B B B OTHER Policy Information Page Endorsement...WC New Jersey Participating Provisions Endorsement...WC B NEW JERSEY NOTICES New Jersey Notice of Cancelation...Form 116-B New Jersey Notice of Reinstatement...Form 117- New Jersey Posting Notice...Form 16NJ New Jersey Posting Notice (Spanish)...Form 17NJ New Jersey Notice of Election Proprietors and Partners Workers Compensation and Employers Liability Insurance...Form PP-1 bsence of a version identifier denotes original printing The version identifier for these endorsements will be governed by revisions in verbiage or change in the Discount Percentages/Table of Rating Values forming a part of the endorsements New, revised or deleted forms