How is the Member Exposure Base Calculated?

The exposure base is the modified pure premium. Experience rating modifications are reflected in both insurer and self-insurer exposure bases.

The WCRA reinsurance rates are applied to the exposure base to obtain a member's premium.

Exposure Base: Insurers

Modified pure premium for insurer members is earned premium at the designated statistical reporting level.

The WCRA obtains data on earned premiums (for regular plus large deductible business) from the Annual Call for Experience that members submit to the Minnesota Workers’ Compensation Insurers Association (MWCIA). Experience rating modifications of the insurers’ individual policyholders are incorporated within the Annual Call data.

Exposure Base: Self-insurers

Modified pure premium for self-insurer members is pure premium multiplied by the experience modification rating factor.

The pure premium exposure for self-insurers is calculated from the Minnesota payroll report, which is due at the WCRA on April 1 of each year.

Revising the Estimated Exposure Base

A WCRA member may revise its estimated exposure base to better reflect current premium or payroll levels. Estimated exposure base is revised if both of the following requirements are met.

1. The member’s revised estimated exposure base must be at least 15 percent greater or less than the original estimate.
2. The member must reconcile its revised exposure base report to independent wage or premium reports. If these conditions are met, the WCRA will calculate a revised exposure base by annualizing a member’s most recent actual six-month exposure base report.

Exposure Base Audits

The WCRA conducts internal analyses of each member’s exposure base. In addition, the WCRA periodically conducts on-site audits of the payroll reported by self-insurer members and of the premiums reported by insurer members. Any change in a member’s exposure base resulting from audit information will be reflected as an adjustment to the member’s reinsurance premium.

*Pure Premium Adjustment Factor

Starting with the 2023 premium year, the pure premium adjustment factor has been removed.

The adjustment factor of 1.20 was added in 1984 to keep consistency in WCRA’s exposure base when MWCIA switched from a fully loaded rate approach to pure premium class rates. This uniform factor, when multiplied by the schedule of pure premium class rates effective for 1984 and thereafter, results in rates that reasonably approximate the schedule of manual rates effective as of February 1, 1983. Starting January 1, 2023, pure premium class rates developed by MWCIA were updated to include loss expense, trending to the average accident date, and development to ultimate. As a result of these changes, the adjustment factor of 1.20 is removed from the exposure base calculation for premium years 2023 and forward.