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Small Workers Comp Claim Does Not Exist – Risk Is Risk


A Small Workers Comp Claim Is Still Expensive

The term small workers comp claim is such a nefarious item.   I have heard that term often over the past 27 years.  The term should be a smaller part of the risk of a larger loss.

Vector graphic of worried man in the weighing scale Small Workers Comp Claim balancing gadget to credit card
Please note this is an older post before NCCI changed the Primary Loss level.  The concept is still the same.   The Primary Loss part of a claim is now $15,000 in most cases.  This makes the concept of small claims even more false than when this post was written in Sept 2008.

There are two ways that Workers Comp reserves affect your Experience Mod (E-Mod, Mod, X-Mod).

The first $15,000 of the Total Incurred on each claim (reserves + paid) is called the Primary Loss. This is a very expensive part of a Workers Comp claim. Due to the way the Workers Comp system has been structured, there is no such thing as a small claim.

The original thought was that employers with many small claims are more likely to have more large claims out of the many small claims. This was a great way to structure the E-Mod calculation. There is a penalty that was never really assessed properly which may be an unfair part of the E-Mod process.

For example, if an adjuster sets a reserve on a small claim at $30,000. The two parts of the loss would be:

  • $15,000 Primary Loss
  • $15,000 Excess Loss

Looking at the numbers, you might think that your company will pay the same amount of premium for the first $15,000 as for the next $15,000 of the claim.

Check out my next post to see how the Primary Loss (less than $15,000) can cost your company up to 500% more than the Excess part of the loss.

Update – we had to change the values in this post as the Primary Loss portion for most states is now $15,000.   The same concept applies – just different numbers that represent a small workers comp claim comparison.

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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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