Anniversary Rating Date (ARD)

What Is the Anniversary Rating Date (ARD)?

Anniversary Rating Date (ARD) is the day and month that an insurance policy came into effect, and, when reached the following year, marks the date at which the policy can be reexamined. The anniversary rating date, or ARD, determines how changes to the rules and rates of the policy are applied.

The premiums in some types of insurance policies, such as workers' compensation insurance, are governed by predefined rules and may change over time. The anniversary rating date helps determine how these rules are applied. For example, workers' compensation rates are often set by the state and change at a specific date each year. This specific date is referred to as the effective date.

Understanding Anniversary Rating Dates

An anniversary rating date endorsement is attached to a policy only when the ARD is different from the policy renewal date. This attachment modifies the policy to allow the insurer to use the rates from the ARD rather than the rates from the policy renewal date. This prevents the insurance company from canceling the policy before the expiration date and then reissuing it in an effort to take advantage of new prevailing rates in the marketplace.

For example, a policy with an anniversary rating date of May 1 but an effective date of Jan. 1 will only have new rates apply once May 1 is reached. This is because a policy with an anniversary rating date that falls after the effective date will only have new rates apply starting on the anniversary date and remaining through the policy period.

New ARD Rules

Insurance is governed by the states, and some states do not apply anniversary rating dates. In these states, the effective date is the date one which rules and rating changes are applied. Anniversary rating dates are especially important in cases in which a policy has been canceled or rewritten several times, or if multiple policies exist with different effective dates.

The National Council on Compensation Insurance Inc. (NCCI) eliminated the anniversary rating date rule on May 1, 2017. The organization gave this example to demonstrate the new rule: 

An employer has a full-term policy effective Jan. 1, 2015, with a Jan. 1, 2015, ARD. The policy is canceled short term, effective Aug. 15, 2015. The rewritten policy is a full-term policy effective Aug. 15, 2015, through Aug. 15, 2016. The policy would use the following two sets of rates: 2015, rates would apply from Aug. 15, 2015, through Jan. 1, 2016. 2016, rates would apply from Jan. 1, 2016, through Aug. 15, 2016. Under the change, the rewritten policy effective on Aug. 15, 2015, uses rates effective on that date, not the rates effective on Jan. 1, 2015.