EMod XMod Changes Upcoming Will Change Premium Audits
WC EMod XMod changes upcoming may cause a new type of review. As I had posted a few months ago, the NCCI(R) has invented a new way to promulgate (calculate) Experience Modification Factors (E-Mod/X-Mod). I just received notice that the rating bureau for California -WCIRB- is preparing to follow suit. The new E-Mods are based somewhat on a different set of statistics. Will all companies’ E-Mods change from the former calculation? This is a yes and no answer.
If your company does not have any claims, the E-Mods/X-Mods will not change significantly. If you have more than one or two claims, it will change dramatically. This is going to change the rules on how companies such as ours perform Premium Audit reviews for employers. The way that it is being done now will be a thing of the past.
What one area will employers and companies such as J&L have to be very versed in to be able to do accurate Workers Compensation premium audits for employers? How I found out was by reading the statistical study used as a basis for the change. It was buried deep in the study.
I am glad that we are strong in that area and have been doing very similar reviews for 14 years. We were lucky. You heard it here first.
EMod XMod Calculations Changing 10-1 Will Indirectly Affect Premium Audits
Premium audits structure changes soon. The structure of doing premium audits and E-Mod/X-Mod reviews are Changing October 1st. All the rating bureaus will be changing how they calculate E-Mods including California. As I said in the last post, there are some major components of claims that will need to be examined more closely after the new changes.
Without becoming too technical, a claims review background will now be needed to fully understand how companies’ E-Mods/X-Mods are calculated. The E-Mod/X-Mod calculation sheets will even look different. Unfortunately, the formula for calculating the E-Mods/X-Mods will now be more complicated. The new rules will add on multiple columns of claims information where before there was only an injury code, status code, and the total incurred figure.
A loss run review is now even more important. Pulling or requesting a current loss run will make reviewing the loss run easier. I have posted numerous times about having online access to your claims information. This will now even be more important. Having inaccurate claims information will be very costly.
I will post more on this situation after the first of next month when the changes become effective.
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