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Very Important Rule Change By NCCI

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NCCI Important Rule Change

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A Very Important Rule Change by the NCCI

As I started to cover in the last post, late in 2003, the NCCI made a rule change that benefited Workers Comp insurance carriers greatly and ended up costing employers millions every year.

The old rule was that no Workers Comp policy may appear in an Experience Modification Factor (E-Mod) for a certain employer more than three times. That meant that multiple policies could not be piled into an employer’s E-Mod. Now, there are no actual limits on the number of policies that can be calculated into an E-Mod for a Workers Comp policy.

To keep this post as concise as possible, there are three basic rules. They are:

  1. The policy must have incepted (started) between 12 and 57 months prior to the policy.
  2. The policy periods covered cannot exceed 45 months in total .
  3. A policy can be used multiple times as long as rules #1 and #2 are not violated.
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This rule can create very dangerous situation for employer that decides to shorten their policy period. You could end up stacking 4 or more years of policies into your E-Mod. This is especially true if one of the oldest polices had a very bad year for accidents. Under the old rule, the policy could not be used if it had been used three times in the past for an E-Mod. In the next example, which was from a real policy, I will show how this rule can be very dangerous.

The reason that the NCCI had instituted the new rule was that certain unscrupulous agents or employers were stacking short-term policies to manipulate the rules to cause a lower E-Mod. We have seen this a few times in our Workers Comp policy reviews.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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