Prior to 1992, the Texas Department of Insurance promulgated rates for all insurance carriers to use. Legislation effective in 1992 required insurance carriers to begin developing and filing their own rates which resulted in rates and rating plans varying from one insurance carrier to another. It is now to an employer’s benefit to shop around for the most affordable coverage.

Texas employers are assigned one or more classifications based on the type of business. Each employee’s payroll is then assigned to the appropriate classification. The total payroll for each classification is then multiplied by the insurer’s filed rate for that classification (rate per $100 payroll) to determine premium. The employers’ basic premium is the sum of the individual classification premiums.

There are other factors that may be utilized to increase or decrease the employer’s premium. An experience rating modifier that reflects the employer’s past loss history may be applied to the premium. (The employer may be able to negotiate the experience modifier downward if they have improved loss ratios or implemented improved safety programs.) A schedule rating debit or credit may be applied to the premium depending on individual characteristics of the employer’s business that may not be reflected in the rate. In addition, there are several optional rating plans such as deductibles or retrospective rating that are available to insureds that may reduce premiums.

Effective January 1, 1994, Texas adopted a new classification system for workers’ compensation and employers’ liability insurance which reduced the number of classifications from approximately 650 to approximately 400. Effective January 1, 1999, additional revisions were made to the classification system. All insurers must use the classifications contained in the Texas classification system. The Texas classifications may differ significantly from those used in other states because they are specific to Texas Businesses. Insurance companies must use Texas classifications, but the rates for the individual classifications may differ from one company to another.

1. The basis of rate pages set out the 1-1-2001, 1-1-2002, 1-1-2003, 1-1-2005, 1-1-2006, and 3-1-2007 relativities which are fixed by the Commissioner and are the base rates for a majority of insurance carriers. Note: Relativities were not amended for 1-1-2004.
   Note: Carriers have the option to develop and file their own relativities-but only a few do.
   
   
2. The next section of the guide lists the insurance carriers and the percentages whereby the relativities are adjusted. This section will indicate if the insurance carrier has developed its own relativities in lieu of using those on page 1. This section also indicates the maximum and minimum schedule rating debit or credit percentages that each carrier has filed. Schedule rating is optional and allows the insurance carrier to deviate from the filed rates based on individual characteristics on the business. The criteria and debits and credits do not have to be standard between carriers.
   
3. The third part is the rate guide is an index of insurance carriers. The index lists each insurance carrier alphabetically and indicates the name of the group each carrier is in. The rate portion of the guide is arranged alphabetically by insurance group.