Term Of The Day – Excess Loss
The Workers Comp term of the day is excess loss. It is the amount of a Workers Compensation claim that exceeds the Primary Loss – usually $5,000.
The Excess Loss does not affect the EMR/E-Mod/X-Mod as much as the Primary Loss on a dollar-per-dollar basis. It is still an important factor in determining the premium amount.
The split point level was increased by most of the rating bureaus including NCCI in 2012. The level was increased from 5,000 to 15,000 over a span of three years. J&L Risk Management Consultants wrote numerous articles on the very critical increases.
NCCI had expressed in various articles that the increased minimum Excess Loss was premium neutral. This may not have been the case for many safe employers. Many saw increases in their E-Mods with no adverse claims data.
As with the Primary Loss part of the Workers Comp claim, the amounts are based on the Total Incurred associated with the claim.
The rating bureaus provide a factor that reduces the effect on the Experience Mod. The factor appears on the Experience Rating sheets.
Update – The Split point now begins at $15,000 for most NCCI-rated states. California has a floating split point that relies on company size.