The Maryland Insurance Administration has reviewed and approved a filing from its authorized workers’ compensation rating organization, the National Council on Compensation Insurance (NCCI), regarding a temporary rule change for workers’ compensation insurance.
This comes after the administration issued a bulletin on April 13, 2020, encouraging insurers to adjust workers’ comp premiums mid-term as needed to reflect reductions in payroll and provide attendant premium relief. The administration also interacted with NCCI regarding the need to revise workers’ comp rating rules in order to exclude payroll from premium calculations for employees that are being paid by an employer but are not working at all due to the COVID-19 crisis.
As a result, NCCI filed and the administration approved changes to the Statistical Plan for Workers’ Compensation and Employers Liability Insurance and the Basic Manual for Workers’ Compensation and Employers Liability Insurance.
These temporary rule changes allow for the exclusion of payroll for workers who are not performing any employment functions but are still being paid by the employer. The rules specify that the employer must be able to document this payroll segment in order to exclude such payroll amounts.
The rule changes are presently in effect from March 1, 2020, through December 31, 2020. However, the termination date of the changes could be moved forward or backward in light of future developments, according to a Maryland Insurance Administration press release.
This comes after Maryland Governor Lawrence J. Hogan Jr. declared a State of Emergency for the entire state on March 5, 2020, due to the COVID-19 virus. Due to the pandemic, Maryland’s business community, including small, medium and large employers, have been facing operational and financial challenges, the release said.
All employers that are paying salaries to furloughed employees during the current State of Emergency in Maryland should keep accurate and verifiable records of those payments, according to the release. Employers with qualifying payroll should notify their workers’ comp insurance producer or insurer and be prepared to document these payments in order to reduce the amount of payroll subjected to premium calculation, the release added.
Source: Maryland Insurance Administration
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