Pub. 3 2013 Issue 1

14 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com rewards companies that more effectively prevent and manage their claims. Why change now? NCCI is making this change because it’s been 20 years since the last split point update. 1 Data has shown that the average cost of a claim has tripled in that time. This has led to experience modification factors reflecting less of an individual firm’s actual experience. What can you do to reduce your experience modification factor? You can’t change your past claims and their effect on your experience modification factor; however, there are a couple of ways you can reduce the negative impact of this change going forward: In many states, medical only claims are discounted by 70%*, compared to claims that include lost time (wages). With the increase in split points, that 70% reduction is that much more important. Fully committing and implementing a light duty/ return - to-work program can help keep the claim contained to medical only costs. When is your loss data reported? The data used to calculate your experience modification is sent by the insurer to the rating bureau six months before the in- surance renewal date . Three years of data are used to calculate the experience modification, beginning four years prior and not including the current year. For example, an employer with a policy that renewed on January 1, 2012, will generally have an experience modification factor that uses the loss experience for policies that were effective 1/1/08–1/1/09, 1/1/09–1/1/10, and 1/1/10–1/1/11. Call your insurance carrier and request a claims history re- port seven to eight months before your policy expires. Review the report for open claims and to confirm current information before the data is reported to NCCI. Often, small open claims can be reserved at a higher amount with nothing paid. The reserve amount is reported to NCCI until the claim is closed. Reserves count against your experience modification factor even if noth- ing has been paid. Times are changing. Don’t get caught off guard! Now more than ever, it is time to focus on risk management, claims prevention, and claims management so your business can remain competitive and thrive. Whether you are a current client of Federated Insur- ance or not, contact your local marketing representative to tap into his or her knowledge of the workers’ compensation experience modification. Q *Medical Only discount not available in all states. 1 NCCI does not administer the Experience Rating plans in California, Delaware, Michigan, New Jersey, and Pennsylvania. These states provide their own bureau to administer the Experience Rating Plan. The split point changes discussed above may not apply. In Minnesota, New York, Texas, and Wisconsin, NCCI Experience Rating Plan ap- plies only when the rating also includes an NCCI state. In monopolistic states (North Dakota, Ohio, Washington, and Wyoming), a state agency administers the plans and rates. For more information, contact Mitchell Gorham at Federated Insurance, 1-812-406-6946, or your local Federated Insurance marketing representative. To find your local representative, and to learn more about Federated’s business insurance, log on to www.federatedinsurance.com , or call 1-800-533-0472. Q Workers’ Compensation — continued Don’t get caught off guard! Now more than ever, it is time to focus on risk management, claims prevention, and claims management so your business can remain competitive and thrive. Predicting Lender Acceptance is Like Predicting the Weather You Could Be Wrong Secure customer financing with confidence by submitting a single contract to several lenders at one time – the LAW ® 553 Retail Installment Sale Contract. For more information, contact your local Document Consultant or call 800.344.0996.