Summary#

Colorado SB 26-175, Adjust Experience Modification Factor in Workers’ Compensation, adds a new section to Colorado’s workers’ compensation statutes. It requires insurers, after a qualifying request, to have an employer’s experience modification factor revised using the amount paid on a closed claim instead of the earlier amount that included reserves (estimated future claim costs). The bill’s practical aim is to correct an employer’s factor when the final claim amount is lower; it does not guarantee a lower premium.

• An employer or licensed insurance producer may ask the insurer to start the correction only within a set time window: from when the claim is reported to a rating bureau until 31 days after the employer’s rating effective date.
• The request is allowed only if the reported open-claim amount was higher than the amount after closure, and the lower amount would reduce the factor by at least 0.05 or bring it from above 1.0 to 1.0 or below.
• The insurer must notify the authorized rating organization, which must adjust the factor within 30 days after the insurer’s notice.
• The insurer must credit the employer for any resulting premium change within the employer’s policy period.
• The law is signed and is scheduled to take effect January 1, 2027, subject to the bill’s referendum provision. It applies to claims closed on or after the applicable effective date.

What it means for you#

• Employers: If a closed claim meets the bill’s conditions, you or your licensed insurance producer may notify your insurer within the specified window. If the factor is revised and changes the premium, the insurer must provide a credit within the policy period. The bill does not promise that every closed claim will qualify or that the change will lower the premium.
• Insurers: When notified about a qualifying claim, you must notify the authorized rating organization to revise the factor.
• Authorized rating organization: You must make the adjustment within 30 days after receiving the insurer’s notice.
• Injured workers: The bill does not directly change workers’ compensation benefits or eligibility for them. It changes how a qualifying employer’s experience modification factor is calculated.

Money#

No cost estimate or state spending figure is provided.

• Employers may receive a premium credit if the revised factor changes their premium.
• Insurers and the authorized rating organization must handle notices and adjustments. The bill provides no estimate of the cost of this work.
• The bill does not specify a new tax, fee, or fine.

What is unclear#

• The supplied materials do not include the existing workers’ compensation law or rating rules. I cannot verify how this process compares with current law or what other rules already apply.
• The bill does not set a specific deadline for the insurer to notify the rating organization after the employer or producer gives notice.
• It does not explain the detailed calculation of the revised factor or how disputes about the claim amount, factor, or premium credit would be handled.
• The materials do not say whether a referendum petition was filed or what effect, if any, it had on the scheduled effective date.

Case for#

• A factor based on the amount actually paid after a claim closes may better reflect the final cost of that claim than an earlier amount that included reserves.
• The bill sets limits on when a correction can be requested, including a minimum change to the factor, rather than requiring every closed claim to be recalculated.
• Requiring a premium credit within the policy period gives employers a stated time frame to receive the financial effect of a qualifying adjustment.

Case against#

• The request window ends 31 days after the employer’s rating effective date. An employer that misses it cannot use this process for that claim under the bill.
• The bill sets a 30-day deadline for the rating organization, but no specific deadline for the insurer’s notice to it.
• The bill does not set out how calculation disputes or other disagreements will be resolved, leaving those details to other applicable rules or processes.