anniversary rating date
In some types of insurance that are subject to experience rating, such as
workers compensation insurance, the date that governs the application of rates
and experience modifiers when a prior policy has been canceled midterm. It prevents
either the insured or the insurer from canceling a policy midterm to take advantage
of a more favorable rate structure. It also may have application for changes
of ownership or combinations of ownership. For an example of how the anniversary
rating date applies in the case of a canceled policy, assume a workers compensation
policy is written for a 1-year term effective January 1, 2007. It is subsequently
canceled and rewritten effective July 1, 2007. The new policy would carry an
anniversary rating date of January 1, 2008. The rates effective on July 1,
2007, when the new policy is issued, are those that were effective January 1,
2007, not those that are currently effective. On January 1, 2008, the anniversary
rating date, the policy is endorsed to apply the rates and modifier effective
January 1, 2008. Then, when the new policy expires July 1, 2008, and is renewed,
the anniversary date becomes July 1 and stays that date until some event causes
the process to begin all over. See also
Anniversary date.
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