Can One Claim Wreck – Completely Ruin Your Workers Comp Premium
Just one claim does not wreck an E-Mod. My company has had a great Workers Comp safety record over the past eight years. We had one serious injury two years ago. I know that it will start to hit my E-Mod this year. The Total Incurred of the claim is $75,890. Other than a few medical benefits-only claims, this is the only claim we have had for many years. Is this one claim going to wreck my E-Mod and Workers Comp premiums?
This one claim is going to negatively affect your E-mod, but it is not going to wreck it. The way that Workers Comp E-Mods are calculated diminishes the effect of one bad claim.
Your claim of $75,890 is split into two figures:
- The first $5,000 is called a Primary Loss. This part of the claim is charged against your E-Mod and premiums at full cost, so to speak.
- The other $70,890 is reduced by some factor like 80%. This part is called an Excess Loss.
As you are a medium-sized business, you will have a claim here or there that may be more than minor. The Workers Comp E-Mod system shelters employers from the full brunt of one bad claim.
2018 – Update – The Primary Loss as of 2015 is $15,000. When the question was asked the primary loss in #1 above was correct. NCCI changed the primary loss figure over three years from $5,000 to $15,000.
The result of this is to make companies with repetitive claims pay more of their fare share by increasing the E-Mod significantly. One bad claim still does not kill your E-Mod. The problems we now see are companies with more than one claim.
Next Up – The Other Side of the Coin – many small Workers Comp claims, but no major ones.
Two Days from Now – Warning – There is no such thing as a small Workers Comp claim.
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