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NOTICE TO POLICYHOLDER <br />CALIFORNIA WORKERS' COMPENSATION <br />INSURANCE RATING LAWS <br />PursuanttoSection11752.8oftheCaliforniaInsuranceCode,weareprovidingyouwithanexplanationofthe <br />Californiaworkers'compensationratinglawsapplicabletonewandrenewalpolicieswithpolicyeffectivedatesonand <br />after January 1, 1995. <br />1.Thelawsrequiringallinsurerstochargethesameminimumrateuniformlytoallemployerswithinagiven <br />classificationhasbeenrepealed.BeginningJanuary1,1995,wewillestablishourownratesforworkers' <br />compensation.Ourrateswillnotbeapplicablepriortothefirstnormalpolicyeffectivedateofapolicyinceptingonor <br />afterJanuary1,1995.Ourrates,ratingplansandrelatedinformationarefiledwiththeInsuranceCommissionerand <br />are open for public inspection. <br />2.TheInsuranceCommissionercandisapproveourrates,ratingplansorclassificationsonlyifhehasdeterminedafter <br />publichearingthatourratesmightjeopardizeourabilitytopayclaimsorcreateamonopolyinthemarket.A <br />monopolyisdefinedbylawasamarketwhereoneinsurerwrites20%ormoreofthatpartoftheCaliforniaworkers' <br />compensationinsurancethatisnotwrittenbytheStateCompensationInsuranceFund.Iftheinsurance <br />Commissionerdisapprovesourrates,ratingplansorclassification,hemayorderanincreaseintheratesapplicable <br />to outstanding policies. <br />3.RatingorganizationsmaydeveloppurepremiumrateswhicharesubjecttotheInsuranceCommissioner'sapproval. <br />Apurepremiumratereflectstheanticipatedcostandexpensesofclaimsper$100ofpayrollforagiven <br />classification.Purepremiumratesareadvisoryonly,aswearenotrequiredtosuethepurepremiumrates <br />developed by any rating organization in establishing our own rates. <br />4.Wemustadheretoasingle,uniformexperienceratingplan.Ifyouareeligibleforexperienceratingundertheplan, <br />wewillberequiredtoadjustyourpremiumtoreflectyourclaimhistory.Abetterclaimhistorygenerallyresultsina <br />lowerexperienceratingmodification;moreclaims,ormoreexpensiveclaims,generallyresultinahigherexperience <br />ratingmodification.Theuniformexperienceratingplandevelopedbytheinsuranceratingorganizationdesignatedby <br />the Insurance commissioner is subject to the approval of the Insurance Commissioner. <br />5.AstandardclassificationsystemdevelopedbytheinsuranceratingorganizationdesignatedbytheInsurance <br />CommissionerissubjecttoapprovaloftheInsuranceCommissioner.Thestandardclassificationsystemisamethod <br />ofrecognizingandseparatingpolicyholdersintoindustryoroccupationalgroupsaccordingtotheirsimilaritiesand/or <br />differences.Wecanadoptandapplythestandardclassificationsystemordevelopandapplyourownclassification <br />system,providedthatwecanreportthepayroll,expensesandothercostsofclaimsinawaywhichisconsistentwith <br />the standard classification system. <br />6.Our rates and classifications may not violate the Unruh Civil Rights Act or be unfairly discriminatory. <br />7.Wewillprovideanappealprocessforyoutoappealthewaywerateyourinsurancepolicy.Theprocesswillrequire <br />ustorespondtoyourwrittenappealwithin30days.Ifyouarenotsatisfiedwiththeresultofyourappeal,youmay <br />appeal our decision to the Insurance Commissioner. <br />Form WC 66 02 05 APrinted in U.S.A. <br /> <br />