Are you worried about NCCI and some independent states announcement to increase the experience rating split point values starting in 2013, with further increases in 2014 and 2015 and adjustments for inflation?
NCCI EXPERIENCE RATING SPLIT POINT CHANGE
Did you know that NCCI sums up these changes to experience rating split point change, saying “good mods will get better and bad mods will get worse?”
WORKERS COMPENSATION INSURANCE BROKER OR EMPLOYER
Are you a workers compensation insurance broker or an employer worried about premiums increasing significantly from bad experience mods getting worse with the new experience rating split point change?
EXPERIENCE MOD REDUCTIONS TODAY USING PAST LOSSES
This chart shows the claims experience being used to promulgate the 2013, 2014, and 2015 experience mods. Almost all of the claims experience that affect these years are on losses that have already occurred.
| 2013 Experience Mod Rating uses claims from the following years: | 2014 Experience Mod Rating uses claims from the following years: | 2015 Experience Mod Rating uses claims from the following years: |
| 2011 | 2012 | 2013 |
| 2010 | 2011 | 2012 |
| 2009 | 2010 | 2011 |
Blue = prior years, Green = current year
So the only immediate solution to reduce experience mods effective 2013, 2014, and 2015 is to change losses that have already occurred.
WORKERS COMP PRIMARY LOSSES
If you have a sizeable workers comp premium with a lot of losses every year, your experience modifications are about to rise tremendously due to the fact that a larger portion of your losses will fall into the primary loss category:
2012 Losses (experience rating split point: $5,000)
| Claim# | Claim Amount | Primary Losses | Excess Losses |
| A001 | $25,000 | $5,000 | $20,000 |
| A002 | $30,000 | $5,000 | $25,000 |
| A003 | $40,000 | $5,000 | $35,000 |
| A004 | $50,000 | $5,000 | $45,000 |
| Primary Losses: | $20,000 |
2013 Losses (experience rating split point: $10,000)
| Claim# | Claim Amount | Primary Losses | Excess Losses |
| A001 | $25,000 | $10,000 | $15,000 |
| A002 | $30,000 | $10,000 | $20,000 |
| A003 | $40,000 | $10,000 | $30,000 |
| A004 | $50,000 | $10,000 | $40,000 |
| Primary Losses: | $40,000 |
2014 Losses (experience rating split point: $13,500)
| Claim# | Claim Amount | Primary Losses | Excess Losses |
| A001 | $25,000 | $13,500 | $11,500 |
| A002 | $30,000 | $13,500 | $16,500 |
| A003 | $40,000 | $13,500 | $26,500 |
| A004 | $50,000 | $13,500 | $36,500 |
| Primary Losses: | $54,000 |
2015 Losses (experience rating split point: $15,000)
| Claim# | Claim Amount | Primary Losses | Excess Losses |
| A001 | $25,000 | $15,000 | $10,000 |
| A002 | $30,000 | $15,000 | $15,000 |
| A003 | $40,000 | $15,000 | $25,000 |
| A004 | $50,000 | $15,000 | $35,000 |
| Primary Losses: | $60,000 |
In the above example, primary losses in these four claims total $20,000 in 2012. The primary losses total $60,000 in 2015 for the same exact claims, triple that of 2012. This is not even accounting for the added inflation that will be used in 2015 and going forward.
Workers Compensation Premium Recovery is the only answer to the current experience rating split point change. This service offers to knock down current and prior years’ mods, obtain cash back returns, ensure future savings for you to keep, and provide a better underwriting profile to enter the renewal marketplace with. Knocking down experience mods will certainly help your company with the new experience rating split point change.
