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Workers Comp Self Insureds LDF Is Experience Mod


Workers Comp Self Insureds Have an LDF

The LDF (Los Development Factor) equates to the E-Mod for self insureds.  I have posted a few times in the past on Self Insureds thinking they are out of the Workers Comp E-Mod system. Actually, nothing could be further from the truth.

Equal LDF scale
Wikimedia Commons – Lilly_M

I have heard this during our presentations and at conferences that Self Insureds are really not in the Workers Compensation system. I used to think companies or governmental entities did not know Loss Development Factors. Lately, I have come to the somewhat scary conclusion Self Insureds are not being provided with them.

If your company or governmental entity has not been provided with one, then you should obtain one immediately. Operating a self-insured program without an LDF is like trying to run a budget by using a pencil and paper. Your company is operating in the dark.

Where does one obtain this elusive statistic? Your actuary should be able to provide you with one or you can use software to project your factor. There is one caveat to using the software. Often, the claims data cannot be just plugged in without a few or many adjustments. J&L does do LDF’s for our Self Insured clients on request. However, we have more of a claims angle on the LDFs.

Man Working LDF Using Calculator

It is calculated using the triangulation method. I have been debating with actuaries for many years that other statistics such as Regression, etc. should also factor into the LDF. The official definition for an LDF: element used to adjust losses to reflect the Incurred But Not Reported (IBNR) under the retrospective method of rating.

My own definition is – a forecast of the future budgeted values for the life of a claim extending up to ten years in the future.

The bottom line is that if you are Self Insured, make sure you have a LDF handy when you are reviewing your Workers Comp budget for senior-level management and as a guide to how much liquidity is required by your Workers Comp program.

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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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