WC & EL / PART ONE / RULE IX:

The cancelation condition of the Standard Policy permits cancelation by the employer or by the insurance carrier.

1. If a policy is canceled by an employer who continues in business, but no longer has employees, premium should be adjusted in accordance with this Rule.
   
2. Procedures for cancelation notices for policies returned to the insurance carrier as “Not Wanted” or “Not Taken”:
   
1. If such policies are returned to an insurance carrier or to an agent (not broker) for flat cancelation before the effective date of the policy and the policy has not been filed with the Rating Board and/or New York State Workers’ Compensation Board, a notification of cancelation does not have to be filed with the Chair of the New York State Workers’ Compensation Board, or sent to the Rating Board or the employer.
2. If such policies are returned to an insurance carrier or to its agent (not broker) for flat cancelation after the inception date of the policy, and the policy has been filed with the Rating Board and/or New York State Workers’ Compensation Board, notice of cancelation must be sent to the employer and the Rating Board and must also be electronically sent to the Chair of the New York State Workers’ Compensation Board.
3. A retroactive cancelation of a policy is not permissible even if an employer has retired from business or his operations were concluded prior to the date the carrier was notified that coverage was not necessary.

Premium for the canceled policy shall be computed as follows:

1. By the Insurance Carrier
   
   1. Rates and Payroll

      Apply the carrier’s approved rates to the payroll or other basis of exposure developed during the period the policy was in effect.

   2. Experience Rating

      Apply any experience rating modification factor in accordance with the rules of the New York Experience Rating Plan Manual and Rule VI Section (I) of this Manual.

   3. Expense Constant

      Add the pro rata portion of the carrier’s expense constant.  Refer to Rule VI Section (C) of this Manual.

   4. Minimum Premium

      The total premium for the canceled policy shall not be less than the pro rata portion of the carrier minimum premium. Refer to Rule VI Section (D) of this Manual.

2. By the Employer When Retiring from Business

   Compute the premium as provided in Section (C)(1) above if a policy is canceled by the employer when:

   1. All the work covered by the policy has been completed, or
   2. All interest in any business covered by the policy has been sold, or
   3. The employer has retired from all business covered by the policy.

      Note: A material change in the ownership of a corporation which results in the elimination of experience under the rules of the New York Experience Rating Plan Manual does not constitute retiring from the business insured by the policy.

3. By the Employer When Not Retiring from Business
   

   The premium for a policy canceled by an employer who continues in business shall be based on the Standard Short Rate Cancelation Table in this Rule and computed as follows:

   1. Actual Payroll

      Determine the payroll developed during the period the policy was in effect.

   2. Extended Payroll and Number of Days
      
      1. Extended Payroll

         Extend such payroll pro rata based on the number of days for which the policy was written divided by the number of days the policy remained in force to produce the full policy payroll.

         Example:

         A policy written for 250 days that remained in effect for 185 days produced a payroll of $55,500.  Payroll extended for the original policy term - $ 55,500 x 250/185 = $75,000.

      2. Extended Number of Days

         The extended number of days shall be determined by dividing the number of days the policy was in force by the number of days for which the policy was written and multiplying the quotient by 365 days.  When the policy was written for a one-year period, the extended number of days will equal the number of days the policy remained in force.

   3. Rates

      Apply the carrier’s approved rates to the payroll in (3)(b)(i) above.

   4. Experience Rating or Merit Rating

      Apply any experience or merit rating factor in accordance with the rules of the New York Experience Rating Plan Manual and Rule VI Section (I) of this Manual.

   5. Premium Discount

      Apply the carrier’s premium discount based on the final earned total standard premium.

   6. Determination of Short Rate Manual Premium
      
      1. Option I – Short Rate Percentage

         Based on the extended number of days calculated in (3)(b)(ii) above, apply the short rate percentage shown in the Short Rate Cancelation Table in this Rule to the premium computed based on the extended payroll to determine the short rate portion of the premium.

      2. Option II – Short Rate Factor Alternative Method

         The Alternative Method may be used for one-year policies.  Apply the short rate factor shown in the Alternative Short Rate Cancelation Table in this Rule to the pro-rata premium computed based on the number of days the policy was in effect to determine the short rate portion of the premium.

   7. Expense Constant

      Add the short rate portion of the carrier’s expense constant.  Refer to Rule VI Section (C) of this Manual.

   8. Minimum Premium

      The total premium for the canceled policy shall not be less than the carrier’s minimum premium.  Refer to Rule VI Section (D) of this Manual.

Refer to short rate cancelation tables below for computation for policies originally written for a one-year period.