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Small Workers Comp Claim – Often Ignored But Expensive Risk


Small Workers Comp Claim Can Easily Be A Huge One

Reviewing a loss run for a small Workers Comp Claim justifies the time to perform the task.  Please see the last two days of postings. It may be best to read them before this post. This mini-analysis is similar to yesterday’s post.

Alternative Small Workers Comp Claim bank
Wikimedia Commons – Zceisab

We often hear when reviewing a loss run that a claim or a group of claims are only small claims. However, due to the structure of how a Workers Comp E-Mod is calculated, there is no such thing as a small claim.

The way that E-Mods are calculated is that the first $15000 is the primary loss. After $15,000, there is a discount factor that reduces the amount that the Workers Comp E-Mod and premiums are affected.

Looking at a claim for say $15,000 – the employer is charged the full amount against their E-Mod. Remember that is the full Primary Loss. How much of an amount above $15,000 equates to the first $15,000? If you look at the last posting, there is a discount of 80%. So, an insured would pay the same for the next $20,000 of Excess Loss as they did for the first $15,000.

Think of it this way – for a $55,000 claim – the first $15,000 is as expensive as the next $65,000.

The bottom line is that there is no such thing as a small claim.  Check out claims festering to see how even a medical only can cost a large amount of premiums.  In the example above, the Primary Loss portion of the claim is 400% more costly than the Excess Loss after $15,000.

Update – Due to The NCCI’s Increase of the Primary Loss to $15,000, the primary loss numbers in this article had to be changed.   

Next Up – How Do the Last Three Posts Relate to a Workers Comp Claims Loss Run?

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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