SECTION IV APPLICATION OF EXPERIENCE MODIFICATION

An experience modification for a qualified risk shall be determined annually (except as provided in Rules 3 and 4 of this Section) and shall be effective as of the RED of the risk. No more than one experience modification shall apply to a risk at the same time. Subject to the exceptions noted below, the experience modification shall be applied to the premium developed by the use of carrier rates in force on the effective date of the policy.

EXCEPTIONS: Premiums Not Subject to Experience Rating: The following are not subject to experience rating:

1. 1. Expense Constants.
   2. The policy minimum premium.
   3. Premium under the National Defense Projects Rating Plan.
   4. Premium under Rule 1 of the Atomic Energy Procedure.
   5. The surcharge premium under Rule 2 of the Atomic Energy Procedure.
   6. Premium developed under Code 9740 – Terrorism
   7. Premium developed under Code 9741 – Catastrophe (other than Certified Acts of Terrorism)
   8. Premium developed under Code 1212 – Payments to Paid Furloughed Employees Due to Covid–19
      Exception viii is applicable to new, renewal and in-force policies effective March 1, 2020, through June 30, 2023.
      Exception viii does not apply to new or renewal policies with effective dates on or after July 1, 2023.

The experience modification shall be effective for a period of twelve months (except as provided in Rules 3 and 4 of this Section) and shall apply to all the operations of the risk, regardless of whether the current or any new operations are assigned to the same classifications as were used in establishing such modification.

If a risk is covered by a single policy, the following procedure shall apply:

1. 1. The experience modification effective as of the RED shall apply for the full term of the policy which becomes effective on such date and also for the full term of any policy which becomes effective within three months after such date.
   2. If a policy is written for a period of one year, but is extended for a period of not more than 16 days, the experience modification in effect as of the original termination date shall remain in effect until the termination date of the extended policy. The experience modification which would have become effective as of the RED shall apply for a period of one year from the effective date of the new policy.
   3. If a policy becomes effective on a date more than three months after the RED:
      1. the outstanding experience modification shall apply to the new policy for the period corresponding to the unexpired term of the rating.
      2. a new experience modification then shall apply for the unexpired term of the outstanding policy.
      3. thereafter, a new modification shall apply annually as of a new RED. The new RED shall be the date twelve months after the effective date of the new policy.

If a risk is covered by several policies (as provided in Rule 8 of Section III of this Plan) which differ as to inception dates, the following procedure shall apply:

A single experience modification shall be computed to be effective for a period of twelve months beginning on the RED to be established by the DCRB. The DCRB may, however, authorize the application of an existing experience modification for a period not to exceed fifteen months or a new experience modification for a period greater than three months and less than twelve months for the purpose of establishing a new RED. Any policy effective prior to the new RED established by the DCRB shall be cancelled as of such date and rewritten for a period of twelve months. Any policy effective subsequent to the new RED established by the DCRB shall be written to expire concurrently with the next ensuing RED or shall be cancelled as of that date.

Any policies subject to this rule which are extended beyond the new period of twelve months shall be subject to the provisions of Rules 3(b) and 3(c) of this Section.

1. 1. A contingent experience modification is one that is missing some data but still meets the minimum data requirement displayed in the Minimum Data Requirements Table.
   2. Contingent experience modifications are subject to the premium eligibility requirements and must attain the minimum data requirements displayed in the Minimum Data Requirements Table.
   3. Minimum Data Requirements:
      The following table provides the possible minimum data requirements for all experience periods under the DCRB Experience Rating Plan. Refer to Rule 3, Section III of this Plan for additional information regarding the experience period.

Months of Data included in calculation	Minimum Number of Months of 1st Report Unit Statistical Data Required
Less than 12	All Data
12–24	12
25	13
26	14
27	15
28	16
29	17
30	18
31	19
32	20
33	21
34	22
35	23
36	24
37	25
38	26
39	27
40	28
41	29
42	30
43	31
44	32
45	33