Pub. 3 2013 Issue 1

13 O n the other hand, the National Council on Com- pensation Insurance (NCCI) argues that many employers could actually see a decrease in their experience modification factor. How do we make sense of this? Many different factors are used to calculate a com- pany’s workers’ compensation experience modification factor, including a number of which are out of a business owner’s control. If you have been frustrated with this calculation in the past, then now is the time to start to better manage this very important risk factor that directly affects your insurance premiums. How does it affect you? Let’s explore the major change to the experience mod calculation by defining the term “ split point. ” In examining your Experience RatingWorksheet, you may have noticed that individual claims appear to be capped at $5,000 (far right column of the report). NCCI consid- ers the first $5,000 of the loss to be the primary amount, and the portion of the loss greater than $5,000 the excess amount. The primary amount (first $5,000) fully fac- tors into the experience rating formula, with the excess amount being “discounted.” The current split point ($5,000) will begin increas- ing in 2013; specific dates vary by state. The scheduled changes are as follows: • 2013: The split point will be initially increased to $10,000 • 2014: The split point will be increased to $13,500 • 2015: The split point will be increased to $15,000 plus two years of inflation adjustment Basically, the split point changes increase the im- pact of claims greater than $5,000 on your experience mod factor. Conversely, employers with few or no claims greater than $5,000 will generally see a reduc- tion in their experience mod factor, which essentially Q Workers’ Compensation — continued on page 14 Starting in 2013, thousands of employers all over the country could see their workers’ compensation experience modification factor increase due to a significant change in the way the experience mod is calculated. I Don’t Understand Why My Workers’ Compensation Experience Mod Went Up! BY MITCHELL GORMAN , FEDERATED INSURANCE