1. Forms
2. WC
3. WC-00-04

What This Form Is

The WC 00 04 04 Pending Rate Change Endorsement is an endorsement to the standard Workers Compensation and Employers Liability Insurance Policy. Its primary purpose is to formally notify the policyholder that the premium rates applicable to their policy at the time of issuance are subject to change. This is typically because a rate filing is currently under consideration by the relevant state insurance regulatory authority. If the pending rate filing is approved and results in different rates, the insurance company will subsequently issue another endorsement to update the policy with the new rates and their effective date. This endorsement itself does not change the premium, but rather flags that a change might occur.

It's important to note that "WC 00 04" generally refers to a series of premium-related endorsements in the NCCI (National Council on Compensation Insurance) system. The WC 00 04 04 is a specific endorsement within this series.

Classes of Business It Applies To

This endorsement can apply to virtually any class of business that obtains workers' compensation insurance in a state where NCCI forms are used and where a rate change has been filed with regulators but not yet approved at the time the policy is issued or renewed. It is not specific to any particular industry.

• Example: A construction company in a state where the state rating bureau has proposed a 5% increase in workers' compensation rates for construction classes, but the insurance department has not yet approved the new rates. If the construction company's policy renews before the decision, the WC 00 04 04 endorsement might be attached.
• Example: A restaurant group renewing its workers' compensation policy while the state is considering new rates that could affect the hospitality industry.

Special Considerations

• Rate Uncertainty: This endorsement is used to manage situations of rate uncertainty. It ensures transparency with the insured that their initial quoted premium might not be their final premium.
• State Specificity: The endorsement clarifies its application concerning states. If Item 3.A. of the Information Page lists only one state, the endorsement applies to that state. If multiple states are listed, the endorsement applies only to the state(s) specifically shown in the Schedule of the WC 00 04 04 endorsement itself.
• Mandatory vs. Optional: Its use might be standard procedure for insurers in jurisdictions with pending rate changes to ensure compliance and avoid disputes later.
• Communication is Key: Policyholders should clearly understand that a future premium adjustment (increase or decrease) is possible.

Key Information for Agents and Underwriters

• Agents: Must clearly explain to the insured the purpose and potential impact of this endorsement at the point of sale or renewal. This includes the possibility of additional premium due or a return premium if rates change. Managing client expectations is crucial.
• Underwriters: This endorsement is a mechanism to bind coverage with the understanding that rates are provisional. Underwriters should ensure it is attached when company policy or regulatory circumstances dictate (i.e., when a rate filing is pending). They must also track the outcome of pending rate filings to ensure policies are correctly endorsed with the final rates once approved.
• Pricing: The initial policy premium is calculated using the currently approved rates. The WC 00 04 04 does not itself apply a different rate but signals that the basis for the rate may change.
• Risk Assessment: While the endorsement itself doesn't directly impact risk assessment of the insured, the potential for rate changes might be a factor in the overall insurance market conditions for certain classes or states.
• Documentation: Proper documentation of the pending rate change and the attachment of this endorsement is important for the insurer's records and for clear communication with the policyholder.