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Split Points – There Is No Such Thing As Small Claim – Part III


Split Points – A Small Claim – Part III

Split points represent the line between the Primary and Excess Loss parts of a claim.

Well, we have covered how a small claim is not such a tiny claim after all. The one thing that we often see in workers comp audits – both premium and reserves – is that the smaller claims are ignored and the large claims are targeted. That can be a dangerous way to examine claims.

Picture of Small Claim Split Points Document And Gavel

Take the case of the $10,000 Workers Comp claim that is four years old. That may seem like an insignificant claim, but please look at the previous two posts on Small Claims and you will see that the basic way that the claim is charged to premiums is:

  1. The first $5,000 figures in the E-Mod at the full value – the primary part of the loss.
  2. The next $5,000 figures in the E-Mod at a discounted value – the excess part of the loss. Using the previous post, it would figure into the premium at $2,000.
  3. From #1 and #2 above, a $10,000 reserve set by the adjuster would contribute $7,000 to the E-Mod/premiums.

That is the norm for a $10,000 claim, but what if the claim closes out at $1,000 after four years? That means the employer has overpaid on the claim for three years, and that the file was over-reserved by $9,000.

It is not $9,000, but even more, as it is $4,000 in Primary Losses and $5,000 in Excess Losses.

Lady Holding Small Claim Money

The parts that figure into the E-Mod are:

  • $1,000 in Primary Losses were paid
  • $4,000 in Primary Losses were over-reserved
  • $5,000 in Excess Losses were over-reserved

I think we can leave it there for this post. We will pick up in the same place in the next post. It may be good to print out the posts on this subject and look at them. You will be astounded. I guarantee it.

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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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