New York Workers Compensation Terrorism Risk Insurance Extension Act of 2005

Transcription

1 New York Compensaton Insurance Ratng Board B U L L E T I N February 2, 2006 Contact: Rchard Kaefer Feld Servces Manager (212) ext. 157 rkaefer@nycrb.org R.C To the Members of the Board RE: New York Workers Compensaton Terrorsm Rsk Insurance Extenson Act of 2005 The Rates Commttee has adopted, and the New York State Insurance Department has approved, the Terrorsm Rsk Insurance Extenson Act Endorsement (WC ), the Foregn Terrorsm Premum Endorsement (WC ) and the Domestc Terrorsm, Earthquakes and Catastrophc Industral Accdents Premum Endorsement (WC A) wth an effectve date of January 1, 2006 for new and renewal busness. The Terrorsm Rsk Insurance Act of 2002 expred on December 31, Congress, recognzng that the terrorsm catastrophe exposure contnues to be sgnfcant, passed the Terrorsm Rsk Insurance Extenson Act of Ths Act extends the 2002 Act through 2007 wth certan amendments, most notably related to the sze of the event needed to trgger the Act ($50 mllon n 2006 and $100 mllon n 2007) and the addton of an nsured deductble for 2006 and 2007 whch s noted n the new endorsement. In addton, to comply wth the provsons of the Terrorsm Rsk Insurance Extenson Act of 2005, t s mandatory that WC , WC A and WC be attached to all polces effectve January 1, 2006 and later. The manual pages amendments and endorsements requred by the 2005 Act are shown on the chart on the next page. Please note that WC , the Notfcaton Endorsement of Pendng Law Change to Terrorsm Rsk Insurance Act of 2002, and WC , the Terrorsm Rsk Insurance Act Endorsement are wthdrawn as they are no longer applcable. CD:tg Encl. Prnted manual pages wll be dstrbuted as soon as they become avalable. Very truly yours, Monte Almer Presdent 200 East Forty-Second Street, New York, New York Telephone: (212) Fax: (212)

2 TERRORISM RISK INSURANCE EXTENSION ACT OF 2005 EXPLANATION OF MANUAL RULE CHANGES PAGE NO. NEW YORK WORKERS COMPENSATION CHANGE R-1 WC and WC are beng added to the lst of mandatory endorsements and A s added to WC to reflect the current verson of the endorsement. Rule VI.E.5 whch references the Terrorsm Rsk Insurance Act of 2002 s beng elmnated. Ths s beng replaced by a Foregn Terrorsm rule on Pages R-59 and R-59a. R33, R-59, R-59a A new rule Rule IX.N. Catastrophe Provsons dstngushes between foregn terrorsm and domestc terrorsm. The explanaton for the premum calculaton for foregn terrorsm s the same as the exstng TRIA rule. It was reworded to elmnate references to TRIA. A reference to polces wrtten on an If Any bass was added for clarfcaton and the endorsement number s also referenced. A smlar entry s proposed to state the rules for calculatng domestc terrorsm premums. R38 Rate Page 6 Appendx AD-3 Appendx AD-6 WC WC WC WC A WC The Standard Premum defnton elmnates the reference to TRIA, adds some of the addtonal elements to be ncluded n the standard premum and references Appendx D. The reference to TRIA s elmnated and the page has been amended to reference the new Foregn and Domestc Premum rules. Elmnates the reference to TRIA Elmnates the reference to TRIA The Notfcaton Endorsement of Pendng Law Change to Terrorsm Rsk Insurance Act of 2002 s wthdrawn as t s no longer applcable. The Terrorsm Rsk Insurance Extenson Act Endorsement has been adopted and apples n conjuncton wth WC The Terrorsm Rsk Insurance Act Endorsement s wthdrawn as t s no longer needed. The Domestc Terrorsm, Earthquakes and Catastrophc Industral Accdents Premum Endorsement was amended to reflect the revsed defnton of Domestc Terrorsm. A s added to the endorsement number to reflect the current verson. The Foregn Terrorsm Premum Endorsement has been adopted and apples n conjuncton wth WC PAGE NO. 3 NEW YORK RETROSPECTIVE RATING PLAN MANUAL CHANGE The reference to the TRIA of 2002 and been elmnated and Rule F.5 now references both foregn and domestc terrorsm. PAGE NO. 19 NEW YORK WORKERS COMPENSATION STATISTICAL PLAN MANUAL CHANGE Rules 10.c and 10.d the word certfed s replaced wth foregn Rule 10.d s added for foregn terrorsm whch replaces Rule 10.n on Page 20. The remanng entres are relabeled due to the addton of d. 20 Rule 10.n s removed and placed under Rule 10.d.

3 NEW YORK WORKERS COMPENSATION Page R-1 3 rd Reprnt Effectve January 1, 2006 RULE I RULE I GENERAL A. WORKERS COMPENSATION PART ONE RULES Workers Compensaton as used n ths manual means workmen's compensaton, workers compensaton or occupatonal dsease. B. STANDARD POLICY Standard Polcy means the standard provsons Workers Compensaton and Employers Lablty Insurance Polcy and the Informaton Page approved by the New York State Insurance Department. Every polcy affordng coverage under the New York Workers' Compensaton Law must have the followng endorsements attached: C WC the New York Lmt of Lablty Endorsement; C WC C - the New York Constructon Classfcaton Premum Adjustment Program Explanatory Endorsement; C WC Terrorsm Rsk Insurance Extenson Act Endorsement C WC the Premum Due Date Endorsement; C WC A - Domestc Terrorsm, Earthquake and Catastrophc Industral Accdents Premum Endorsement C WC Foregn Terrorsm Premum Endorsement Excepton: The Standard Polcy shall not be used to provde coverage for employees subject to the New York Volunteer Frefghters' Beneft Law or the New York Volunteer Ambulance Workers' Beneft Law. Such coverage can be afforded only by means of a Volunteer Frefghters' Beneft Law Polcy or a Volunteer Ambulance Workers' Beneft Law Polcy, respectvely. C. ENDORSEMENT FORMS Endorsement forms means authorzed endorsements lsted n the Alphabetcal Lst of Endorsements n Part Four of ths manual. All endorsements must be used n the form prescrbed n ths manual. D. POLICY AND ENDORSEMENT FORMS Refer to the Polcy Forms and Authorzed Endorsement secton of ths manual for a complete descrpton of coverages and nstructons on use of polcy and endorsement forms. E. APPLICATION OF MANUAL RULES Rules apply separately to each polcy, except as allowed by Rule VII Premum Dscount. F. EFFECTIVE DATE 1. Manual Ths manual apples only from the annversary ratng date whch occurs on or after the effectve date of ths manual. 2. Changes The effectve date of a change n any rule, classfcaton or rate s 12:01 a.m. on the date specfed on the manual page. Any change wll be ssued on a reprnted page and wll be desgnated by a. Unless specfed otherwse, each change apples only from the annversary ratng date whch occurs on or after the effectve date of the change.

4 NEW YORK WORKERS COMPENSATION Page R-33 3 rd Reprnt Effectve January 1, 2006 RULE VI 4. Experence Ratng and Mert Ratng The mnmum premum s not subject to an experence ratng modfcaton or a mert ratng factor. 5. Adjustment Upon Audt The mnmum premum s subject to fnal adjustment and shall be determned upon audt on the bass of those classfcatons developng premum. If the fnal earned premum s less than the mnmum premum determned upon audt, that mnmum premum shall be charged. If no classfcaton develops premum, the premum charged shall be the mnmum premum of the code wth the hghest mnmum premum applcable to the busness of the employer. For canceled polces, refer to Rule X. For procedures for nterstate rated polces, refer to Secton I.M. of the New York Dgest of Rulngs and Interpretatons. 6. Specal Mnmum Premum Requrements a. For ncreased lmts of employers lablty on a Standard Polcy, refer to Rule VIII. b. For admralty or federal employments, refer to Rule XIII. c. For domestc workers, refer to Rule XIV. 7. Employers Lablty Polces For a polcy whch provdes only employers lablty nsurance wth ncreased lmts, the mnmum premum shall be ncreased by the factor whch apples to the rate(s) for that polcy. Refer to Rule VIII. 8. Multple State Polces If a polcy provdes workers compensaton nsurance n more than one state, the mnmum premum to be charged for the polcy shall be the sngle hghest mnmum premum of the ndvdual state's mnmum premums. Refer to Secton I.M. of the New York Dgest of Rulngs and Interpretatons for addtonal nformaton. F. DEPOSIT PREMIUM Note: Ths rule does not apply to Pad Loss Collecton Programs wrtten n conjuncton wth Opton V Retrospectve Ratng Plans. For detals regardng the premum payment under these Programs, refer to Part Two, Secton II.E. of the New York Retrospectve Ratng Plan Manual. 1. When Payable A depost premum s payable at the ncepton of the polcy. The depost premum shall not be less than the mnmum premum stated n the polcy. 2. Amount Payable Annual Adjustment For a polcy whch provdes that the premum shall be adjusted upon audt followng the termnaton of an annual perod, the depost premum shall be the total estmated annual premum for that polcy. 3. Amount Payable Interm Adjustment An nterm adjustment and payment of premum s permssble on a monthly, quarterly or semannual bass. If ths method of premum adjustment s provded, the depost premum shall be:

5 NEW YORK WORKERS COMPENSATION Page R-59 3 rd Reprnt Effectve January 1, 2006 RULE IX For retrospectvely rated polces, premum s defned as the retrospectve premum, as determned by the applcable parameters of the Retrospectve Ratng Plan, plus the mpled premum dscount determned on the bass of standard premum. For polces wrtten under all ndependently fled programs, e.g., large deductble programs, the use of a premum base, other than as descrbed n ths rule, must be approved by the New York State Insurance Department pror to use. 4. Assessment Charge The assessment percentages to be appled to each polcy can be found n the Mscellaneous Values page of the rates secton of ths manual. Note: Legslaton requres that the assessment amounts collected from polcyholders be consdered as premum for tax purposes. Assessment charges contemplate premum tax, but not commsson. M. WORKERS COMPENSATION SECURITY FUND SURCHARGE 1. Explanaton The Workers Compensaton Securty Fund Surcharge s a separate dentfable charge to polcyholders for the fundng of the Workers Compensaton Securty Fund whch serves as the guaranty fund for fulfllng the oblgatons of nsolvent prvate carrers wrtng workers compensaton n the state of New York. 2. General Informaton The Workers Compensaton Securty Fund Surcharge amount must be dsplayed as a separate dentfable charge on the polcy nformaton page. Code 9749 must be used n conjuncton wth ths charge. The Workers Compensaton Securty Fund Surcharge amount s subject to change at audt and at all subsequent retrospectve ratng adjustments. The Workers Compensaton Securty Fund Surcharge amount s charged n conjuncton wth the effectve date of the rates used on each polcy. Therefore, where the Annversary Rate Date Endorsement (WC ) apples, e.g., when two sets of rates are used, two surcharge percentages wll apply. 3. Premum Base for Calculatng the Securty Fund Surcharge Total polcy premum, ncludng the New York State Assessment, s the premum base to whch the surcharge percentage, shown n the Mscellaneous Values page n the rates secton of ths manual, s to be appled. N. CATASTROPHE PROVISIONS 1. Foregn Terrorsm Premum for foregn terrorsm s calculated on the bass of total payroll. A rsk s total payroll s dvded by unts of $100 and multpled by the foregn terrorsm rate as shown on the Mscellaneous Values Page. The calculaton s expressed as (Payroll/100 x Foregn Terrorsm Rate = Premum). For non-payroll classes the premum for foregn terrorsm s calculated as a percentage, as shown on the Mscellaneous Values Page, multpled by the non-payroll class premum. The foregn terrorsm premum s not subject to any other modfcatons ncludng, but not lmted to, premum dscount, experence ratng or retrospectve ratng.

6 Page R-59a NEW YORK WORKERS COMPENSATION RULE IX Effectve January 1, 2006 Orgnal Prntng Unless an If Any polcy develops premum durng the polcy term or at audt, polces ssued on an If Any bass wll not be charged ths premum. Attach the Terrorsm Rsk Insurance Extenson Act Endorsement (WC ) and the Foregn Terrorsm Premum Endorsement (WC ). 2. Domestc Terrorsm, Natural Dsaster and Catastrophc Industral Accdents Premum for Domestc Terrorsm, Natural Dsaster and Catastrophc Industral Accdents s calculated on the bass of total payroll. A rsk s total payroll s dvded by unts of $100 and multpled by the domestc terrorsm rate as shown on the Mscellaneous Values Page. The calculaton s expressed as (Payroll/100 x Domestc Terrorsm Rate = Premum). For non-payroll classes the premum for domestc terrorsm s calculated as a percentage, as shown on the Mscellaneous Values Page, multpled by the non-payroll class premum. The domestc terrorsm premum s not subject to any other modfcatons ncludng, but not lmted to, premum dscount, experence ratng or retrospectve ratng. Unless an If Any polcy develops premum durng the polcy term or at audt, polces ssued on an If Any bass wll not be charged ths premum. Attach the Domestc Terrorsm Earthquake and Catastrophc Industral Accdent s Premum Endorsement (WC A)

7 Page R-38 NEW YORK WORKERS COMPENSATION RULE VII Effectve January 1, nd Reprnt RULE VII PREMIUM DISCOUNT Item 4 of the Informaton Page contnued A. EXPLANATION Premum dscount recognzes that the relatve expense of ssung and servcng larger premum polces s less than for smaller premum polces. Premum dscount s a per polcy charge and s calculated based upon the polcy standard premum regardless of any change n annversary ratng date or a mdterm change n the carrer s expense provson. B. DEFINITIONS 1. Standard Premum Standard premum s the premum before the premum dscount. For the purposes of ths rule, the premum s determned on the bass of authorzed rates, any experence ratng or mert ratng modfcaton, credts under the New York Constructon Classfcaton Premum Adjustment Program, surcharges and credts under the Workplace Safety Programs and other programs as shown n Appendx D, non-ratable elements as defned n Rule VI.A.6, arcraft seat surcharges, premum for ncreased lmts of lablty and mnmum premums. The Expense Constant, the New York State Assessment, the Workers Compensaton Securty Fund Surcharge and the addtonal charges for the catastrophe provsons as shown n Rule IX.N shall be excluded from determnaton of the standard premum. 2. Total Standard Premum Total standard premum means the total premum for all states covered by the polcy. 3. Insured Insured means a sngle entty or two or more legal enttes elgble for combnaton under the New York Experence Ratng Plan Manual. C. RETROSPECTIVE RATING Any standard premum under a retrospectve ratng plan s not subject to premum dscount. D. DETERMINATION OF PREMIUM DISCOUNT If a polcy develops total standard premum n excess of $5,000, the standard premum s subject to premum dscount as follows: 1. Wthout Retrospectve Ratng a. Sngle State Polcy If a polcy provdes coverage only n New York, the premum dscount shall be determned by applyng the dscount percentages on the Premum Dscount Table to the total standard premum. b. Multple State Polcy Premum dscount apples on an nterstate bass. It shall be determned by applyng the dscount percentages applcable n each state to each state's porton of the frst $5,000, the next $95,000, the next $400,000 and the amount over $500,000 of the total standard premum. Each state's porton of the foregong dvsons of total standard premum shall be computed by multplyng the total standard premum n each of the above dvsons by the rato of the state standard premum to the total standard premum. Methods of computng premum dscount are n the Appendx.

8 Page 6 NEW YORK WORKERS COMPENSATION Issued January 1, 2006 Effectve October 1, st Reprnt MISCELLANEOUS VALUES (contnued) New York State Assessment Charges General Instructons and Informaton Refer to Rule IX-L., Sectons 1. and 2. Applcable Premum Charge Code Code All Other Assessment Classes Workers Compensaton Board 3.7% 3.3% 2.7% Reopened Case Fund 2.9% 2.9% 2.9% Specal Dsablty Fund 0.0% 0.0% 11.1% Interdepartmental Expenses 0.0% 0.0% 0.7% Specal Funds Conservaton Commttee 0.0% 0.0% 0.1% Total 6.6% 6.2% 17.5% Premum Base Refer to Rule IX-L., Secton 3. For all polces not retrospectvely rated, premum s defned as premum determned on the bass of Board or authorzed (devated) rates (or percentage premum devaton), plus any applcable terrtory dfferental premum, ncludng any experence modfcaton, mert ratng factor, mnmum premum, Constructon Classfcaton Premum Adjustment Program polcy credt factor, surcharges and credts from Workplace Safety Programs, credts from ndependently fled carrer specalty programs (for example, alternatve dspute resoluton, drugfree workplace, managed care or preferred provder organzaton programs), the charge for foregn terrorsm and the addtonal charge for domestc terrorsm catastrophes and natural dsasters. The expense constant, ncludng the expense constant n the mnmum premum, the premum dscount, as defned n Rule VII, and premum credts for partcpaton n any Deductble Program are excluded from the determnaton of the assessment charge. For retrospectvely rated polces, premum s defned as the retrospectve premum as determned by the applcable parameters of the Retrospectve Ratng Plan plus the mpled premum dscount determned on the bass of standard premum. Passenger Seat Surcharge - Applcable n conjuncton wth Code 7421 Arcraft or Helcopter Operaton: Transportaton of Personnel n Conduct of Employer s Busness - Flyng Crew n accordance wth the classfcaton footnote nstructons... $100 per passenger seat $1,000 maxmum per arcraft Terrorsm and Catastrophe Charges Foregn Terrorsm Applcable only n conjuncton wth Rule IX-N.1 of the Manual Terrorsm premum charge per $100 of total polcy payroll... $.034 For non-payroll based classes, charge s % of non-payroll class manual premum % Domestc Terrorsm, Natural Dsasters and Industral Accdents Applcable only n conjuncton wth Rule IX-N.2 of the Manual Catastrophe Charge per $100 of total polcy payroll... $.01 For non-payroll classes, charge s % of non-payroll class manual premum % Workers Compensaton Securty Fund Surcharge Applcable only n accordance wth Rule IX - M of the Manual Charge s % of total polcy premum, ncludng the New York State Assessment % Unted States Longshore and Harbor Workers Compensaton Coverage Percentage Applcable only n connecton wth Rule XII-D of the Manual % (Multply a Non-F classfcaton rate by a factor of to adjust for dfferences n state and federal benefts and assessments)

9 NEW YORK WORKERS COMPENSATION Page AD-3 4 th Reprnt Issued January 1, 2006 APPENDIX D Sequence of Presentaton & / or Calculaton * Statstcal Codes Premum Element Name Calculaton Procedure , 9036 Rate Devaton - Method 3 ( After Experence Modfcaton) (Modfed Premum plus statstcal codes not subject to experence ratng) x devaton factor None TOTAL STANDARD PREMIUM Total Modfed Premum + all premum from classfcatons and statstcal codes not subject to experence ratng (tems 18 thru 34) , 0064 Premum Dscount Tabular or formula value as specfed n the NY WC&EL Manual; not applcable n conjuncton wth retrospectve ratng Expense Constant A fxed dollar amount per polcy as specfed n NY WC&EL Manual Foregn Terrorsm Rate per $100 of total polcy payroll; % of class premum for non-payroll classes Domestc Terrorsm and Natural Catastrophes Rate per $100 of total polcy payroll; % of class premum for non-payroll classes. 39 None TOTAL ESTIMATED ANNUAL PREMIUM Premum combnng all applcable elements above New York State Assessment Usually a percentage of Standard Premum as specfed n the NY WC&EL Manual. 41 None None Total Estmated Premum and Assessment New York Workers Compensaton Securty Fund TOTAL ESTIMATED POLICY COST Total Estmated Annual Premum + NY State Assessment Charge. A percentage of the Total Estmated Annual Premum and Assessments Total Estmated Annual Premum + NY State Assessment Charge + NY WC Securty Fund Charge. * See Pages AD-4 through AD-6 for Premum Element Defntons

10 Page AD-6 NEW YORK WORKERS COMPENSATION APPENDIX D Issued January 1, th Reprnt PREMIUM ALGORITHM (Contnued) PREMIUM ELEMENT DEFINITIONS Sequence of Presentaton & / or Calculaton Premum Element Name Premum Element Defnton 30 Deductble Premum Credt (After Experence Modfcaton) Premum credt for employer electon to remburse carrer for losses below specfed lmt. 31 Short Rate Cancellaton Penalty Penalty charged employer for cancelng polcy before expraton date 32 Mnmum Premum Addtonal premum to balance to mnmum charge 33 Employers Lablty Increased Lmts Mnmum Premum - Admralty or FELA Coverage Addtonal premum to balance to mnmum charge for Part Two ncreased lmts 34 Rate Devaton - Method 3 ( After Experence Modfcaton) Specfed percentage premum adjustment per carrer flng wth Insurance Department. TOTAL STANDARD PREMIUM 35 Premum Dscount Premum adjustment to expense provsons based on sze of standard premum 36 Expense Constant Premum charge whch covers expense such as polcy ssung, recordng and audtng. 37 Foregn Terrorsm Premum for losses subject to foregn terrorsm. 38 Domestc Terrorsm and Natural Catastrophes Premum for losses subject to domestc terrorsm and natural catastrophes 39 TOTAL ESTIMATED ANNUAL PREMIUM Informaton Page Value 40 New York State Assessment A charge to fund the admnstraton of the Workers Compensaton Board and Specal Funds. 41 Total Estmated Premum and Assessment Total Estmated Annual Premum + NY State Assessment Charge. 42 New York Workers Compensaton Securty Fund A charge to fund defcences n the New York Workers Compensaton Securty Fund 43 TOTAL ESTIMATED POLICY COST Informaton Page Value

11 NEW YORK WORKERS COMPENSATION WC Orgnal Prntng Effectve January 1, 2006 TERRORISM RISK INSURANCE EXTENSION ACT ENDORSEMENT Ths endorsement addresses the requrements of the Terrorsm Rsk Insurance Act of 2002 as amended and extended by the Terrorsm Rsk Insurance Extenson Act of Defntons The defntons provded n ths endorsement are based on the defntons n the Act and are ntended to have the same meanng. If words or phrases not defned n ths endorsement are defned n the Act, the defntons n the Act wll apply. Act means the Terrorsm Rsk Insurance Act of 2002, whch took effect on November 26, 2002, and any amendments resultng from the Terrorsm Rsk Insurance Extenson Act of Act of terrorsm means any act that s certfed by the Secretary of the Treasury, n concurrence wth the Secretary of State, and the Attorney General of the Unted States as meetng all of the followng requrements: a. The act s an act of terrorsm. b. The act s volent or dangerous to human lfe, property or nfrastructure. c. The act resulted n damage wthn the Unted States, or outsde of the Unted States n the case of Unted States mssons or certan ar carrers or vessels. d. The act has been commtted by an ndvdual or ndvduals actng on behalf of any foregn person or foregn nterest, as part of an effort to coerce the cvlan populaton of the Unted States or to nfluence the polcy or affect the conduct of the Unted States Government by coercon. Insured terrorsm or war loss means any loss resultng from an act of terrorsm (ncludng an act or war, n the case of workers compensaton) that s covered by prmary or excess property and casualty nsurance ssued by an nsurer f the loss occurs n the Unted States or at Unted States mssons or to certan ar carrers or vessels. Insurer deductble means: a. For the perod begnnng on November 26, 2002 and endng on December 31, 2002, an amount equal to 1% of our drect earned premums, as provded n the Act, over the calendar year mmedately precedng November 26, b. For the perod begnnng on January 1, 2003 and endng on December 31, 2003, an amount equal to 7% of our drect earned premums, as provded n the Act, over the calendar year mmedately precedng January 1, c. For the perod begnnng on January 1, 2004 and endng on December 31, 2004, an amount equal to 10% of our drect earned premums, as provded n the Act, over the calendar year mmedately precedng January 1, d. For the perod begnnng on January 1, 2005 and endng on December 31, 2005, an amount equal to 15% of our drect earned premums, as provded n the Act, over the calendar year mmedately precedng January 1, e. For the perod begnnng on January 1, 2006 and endng on December 31, 2006, an amount equal to 17.5% of our drect earned premums, as provded n the Act, over the calendar year mmedately precedng January 1, f For the perod begnnng on January 1, 2007 and endng on December 31, 2007, an amount equal to 20% of our drect earned premums, as provded n the Act, over the calendar year mmedately precedng January 1, Natonal Councl on Compensaton Insurance, Inc. All Rghts Reserved.

12 WC NEW YORK WORKERS COMPENSATION Orgnal Prntng Effectve January 1, 2006 Lmtaton of Lablty The Act may lmt our lablty to you under ths polcy. If annual aggregate nsured terrorsm or war losses of all nsurers exceed $100,000,000,000 durng the applcable perod provded n the Act, and f we have met our nsurer deductble, the amount we wll pay for nsured terrorsm or war losses under ths polcy wll be lmted by the Act, as determned by the Secretary of the Treasury. Polcyholder Dsclosure Notce 1. Insured terrorsm or war losses would be partally rembursed by the Unted States Government under a formula establshed by the Act. Under ths formula, the Unted States Government would pay 90% for Program Year 4 and 85% for Program Year 5 of our nsured terrorsm or war losses exceedng our nsurer deductble. 2. The premum charged for the coverage ths polcy provdes for nsured terrorsm or war losses s ncluded n the amount shown n Item 4 of the Informaton Page or n the Schedule n the Foregn Terrorsm Premum Endorsement (WC ), attached to ths polcy Natonal Councl on Compensaton Insurance, Inc. All Rghts Reserved.

13 NEW YORK WORKERS COMPENSATION 1 st Reprnt Effectve January 1, 2006 WC A DOMESTIC TERRORISM, EARTHQUAKES, AND CATASTROPHIC INDUSTRIAL ACCIDENTS PREMIUM ENDORSEMENT Ths endorsement s notfcaton that your nsurance carrer s chargng premum to cover the losses that may occur n the event of domestc terrorsm, earthquakes, and/or a catastrophc ndustral accdent. The premum charge provdes fundng for the rsk of earthquakes, catastrophc ndustral accdents, and certan acts of domestc terrorsm. It does not provde fundng for acts of terrorsm certfed as such by the Terrorsm Rsk Insurance Act of 2002 and any amendments resultng from the Terrorsm Rsk Insurance Extenson Act of 2005 (the Act), or acts of foregn terrorsm as that term s defned n the Foregn Terrorsm Premum Endorsement (WC ), attached to ths polcy. For purposes of ths endorsement, the followng defntons apply: Domestc Terrorsm: All acts of terrorsm outsde the scope of the Act or the Foregn Terrorsm Premum Endorsement (WC ), wth aggregate workers compensaton losses n excess of $50 mllon. Earthquake: The shakng and vbraton at the surface of the earth resultng from underground movement along a fault plane or from volcanc actvty where aggregate workers compensaton losses from the sngle event are n excess of $50 mllon. Catastrophc Industral Accdent: Any sngle event resultng n aggregate workers compensaton losses n excess of $50 mllon. Payroll Rate Premum Schedule Note: For non-payroll classes n New York, the charge s a % of the non-payroll class manual premum Natonal Councl on Compensaton Insurance, Inc. All Rghts Reserved.

14 NEW YORK WORKERS COMPENSATION WC Orgnal Prntng Effectve January 1, 2006 FOREIGN TERRORISM PREMIUM ENDORSEMENT Ths endorsement s notfcaton that your nsurance carrer s chargng premum for losses that may occur n the event of an act of foregn terrorsm. Your polcy provdes coverage for workers compensaton losses caused by acts of foregn terrorsm, ncludng workers compensaton beneft oblgatons dctated by state law. Coverage for such losses s stll subject to all terms, defnton, exclusons, and condtons n your polcy, and any applcable federal and/or state laws, rules, or regulatons. For purposes of ths endorsement, an act of foregn terrorsm s defned as: a. Any act that s volent or dangerous to human lfe, property or nfrastructure; and b. The act has been commtted by an ndvdual or ndvduals actng on behalf of any foregn person or foregn nterest, as part of an effort to coerce the cvlan populaton of the Unted States or to nfluence the polcy or affect the conduct of the Unted States Government by coercon. The premum charge for the coverage your polcy provdes for workers compensaton losses caused by an act of foregn terrorsm s shown n Item 4 of the Informaton Page or n the Schedule below. Schedule State Rate per $100 of Payroll Note: For non-payroll classes n New York, the charge s a % of the non-payroll class manual premum Natonal Councl on Compensaton Insurance, Inc. All Rghts Reserved.

15 NEW YORK RETROSPECTIVE RATING PLAN MANUAL Page 3 2nd Reprnt Effectve January 1, 2006 PART ONE B. INSURED Insured means the employer desgnated n Item I of the Informaton Page n the polcy or polces to whch ths Plan s appled by the carrer whch ssued such nsurance. Insured may be two or more legal enttes f the same person, or group of persons, owns the majorty nterest n such enttes. The New York Experence Ratng Plan Manual defnes majorty nterest. It usually means: 1. Majorty of votng stock; or 2. Majorty of members or drectors f there s no votng stock; or 3. Majorty partcpaton of general partners n profts of a partnershp. C. MANUAL Manual means the New York Workers Compensaton and Employers Lablty Manual. D. RISK Rsk means the nsured to whch ths Plan s appled. E. RATES 1. Authorzed rate means ether: a. The manual rate or any other rate that has been establshed by the New York Compensaton Insurance Ratng Board; or b. Where applcable, the rate fled by the carrer and approved n accordance wth state regulatory requrements. 2. Manual rate means the rate shown after the classfcaton code number on the New York rate pages n Part Three of the Manual. F. STANDARD PREMIUM For the purpose of ths Plan, standard premum means the premum for the rsk determned on the bass of authorzed rates, an experence ratng modfcaton, loss constants where applcable, and mnmum premums. Determnaton of standard premum shall exclude: 1. Premum Dscount. 2. The Expense Constant. 3. Premum resultng from the Non-Ratable Element Codes lsted n the New York Experence Ratng Plan Manual. 4. Premum developed by the passenger seat surcharge under Code 7421 Arcraft Operaton flyng crew. 5. Premum developed by provsons for foregn terrorsm, domestc terrorsm, natural dsasters and ndustral accdents. G. INCURRED LOSSES Incurred losses used n the ratng formula for determnng premum under ths Plan are those reported under the rules of the New York Statstcal Plan Manual. Generally, ncurred losses are the actual losses pad and outstandng, nterest or judgments, expenses ncurred n obtanng thrd-party recoveres (not to exceed the amount of a thrd-party recovery), and allocated loss adjustment expenses for employers lablty losses.

16 NEW YORK WORKERS COMPENSATION STATISTICAL PLAN PART III Effectve January 1, th Reprnt 10. Premum Not Subject To Experence Modfcaton Lnes D, E and F Report the classfcaton codes and correspondng exposures and rates (f applcable) and premum amounts for those classfcatons not subject to experence modfcaton. a. Arcraft Operaton Passenger Seat Surcharge Report the premum charged for ths exposure under Code b. Atomc Energy Radaton Exposure Refer to Part I, Item 9. c. Catastrophe Provson for Domestc Terrorsm, Natural Dsasters and Industral Accdents Report the premum amount charged for domestc terrorsm, natural dsasters and ndustral accdents under Code 9741 on the lne under the charge for foregn terrorsm losses. d. Catastrophe Provson for Foregn Terrorsm Report the premum amount charged for foregn terrorsm under Code 9740 on the lne under the Expense Constant. e. Constructon Classfcaton Premum Adjustment Program Credt Report the premum credt amount as a result of ths program under Code f. Drug-Free Workplace Premum Credts For polces wrtten n conjuncton wth a carrer fled Drug-Free Workplace Program, report the premum credt amount under code 9846 when fled not subject to experence ratng. g. Indemnty and/or Medcal Deductble Programs Refer to Item 11 of ths Part. h. Managed Care/Preferred Provder Organzaton Premum Credt For polces wrtten n conjuncton wth a carrer fled and approved Managed Care or Preferred Provder Organzaton program, report the premum credt amount under code Mert Ratng Credts/Debts For polces wth a mert ratng factor of.92, report the premum credt amount under Code For polces wth a mert ratng factor of 1.04 or 1.08, report the premum debt amount under Codes 9896 and 9886, respectvely. For polces wth a mert ratng factor of 1.00, report a zero dollar amount under code j. Mnmum Premum Polces Refer to Item 13 of ths Part. k. Non-Ratable Element Codes For classfcaton codes contanng non-ratable elements, report the exposure amounts, manual rates and premum amounts under the assocated statstcal codes lsted n Part VIII. 19

17 NEW YORK WORKERS COMPENSATION STATISTICAL PLAN 3rd Reprnt Effectve January 1, 2006 PART III l. Rate Devatons Refer to Item 12c of ths Part. m. Safety Investment Premum Credt Report the premum credt as a result of ths program under Code n. Short Rate Penalty Premum For polces canceled on a short rate bass, report the addtonal premum resultng from the applcaton of the Short Rate Cancellaton Rule (Rule X.D) n the New York Workers Compensaton and Employers Lablty Manual under Code o. Workplace Safety and Loss Consultaton Premum Credt Report the premum credt amount as a result of ths program under Code p. Workplace Safety and Loss Consultaton Premum Surcharge Report the premum surcharge amount as a result of ths program under Code Deductbles Report above Lne A the premum credt amount for deductble programs under Code 9664 for credts subject to experence ratng,.e., calculated pror to the applcaton of the experence modfcaton. Report on Lnes D, E, or F the premum credt amount for deductble programs under Code 9663 for credts not subject to experence ratng,.e., calculated after the applcaton of the experence modfcaton. 12. Devatons If a carrer has receved regulatory approval to devate from Ratng Board manual rates, unt statstcal reports shall be submtted n accordance wth the provsons of ths Plan, such that f the approved devaton s appled: a. Drectly to Ratng Board Rates Report the authorzed (devated) rates and the resultant premums n the approprate columns for each classfcaton. b. As a Flat Percentage to the Total Premum Before the Applcaton of Experence Modfcaton Report the Ratng Board manual rates and the resultant premums n the approprate columns for each classfcaton. Report the premum credt adjustment amount resultng from the applcaton of a devaton factor less than 1.00 under Statstcal Code Report the premum debt adjustment amount resultng from the applcaton of a devaton factor greater than 1.00 under Statstcal Code Report these statstcal codes and correspondng premum amounts above Lne A. c. As a Flat Percentage to the Total Premum After the Applcaton of Experence Modfcaton F. Note: Report the Ratng Board manual rates and the resultant premums n the approprate columns for each classfcaton. Report the premum credt adjustment amount resultng from the applcaton of a devaton factor less than 1.00 under Statstcal Code Report the premum debt adjustment amount resultng from the applcaton of a devaton factor greater than 1.00 under Statstcal Code Report these statstcal codes and correspondng premum amounts on Lnes D, E, or A carrer authorzed to apply a devaton must use only one of the above descrbed report procedures. 20