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Expected Losses – Where Are They Located On My EMod Sheets?


Expected Losses – What Are They and Where To Find Them?

The Expected Losses for an employer is the amount of loss an average firm reporting the same exposures in the same classifications would have had during the Experience Period (usually three policy years).

Frequency of Expected Losses EMod Sheet
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Each rating year the NCCI or respective rating bureau calculates the Expected Loss Rates for each classification and each of the three years in the Experience Period. These rates are based on the reported exposures and claim costs for injuries occurring during the Experience Period within each classification for all companies in their respective state.

They are split into two types of losses.   In most states,  NCCI splits the Expected Losses as

  • Expected Primary  – Up To 15,000 of Total Incurred (Paid + Reserved).  The Primary portion charges more to the Mod than the Excess Losses.
  • Expected Excess  – Over 15,000 of Total Incurred.

An insured’s Expected Loss is calculated for each classification and each year in the Experience Period by multiplying the Expected Loss Rate by the insured’s reported exposures by year and classification. The sum of these amounts is the insured’s Expected Loss.

The very basic formula for an E-Mod is  Actual Losses / Expected Losses.  If the Actual is more than the Expected Losses, the E-Mod or X-Mod is will be greater than one.   If the opposite is true, then the E-Mod X-Mod will be less than one.

Safety programs still affect the Mods more than any other Mod reduction method.  Remember that the Mod system compares employers with similar classification codes.

If your business is safer than your competitor’s operations, then the E-mod or X-Mod system will promulgate a lower Mod for your company.   Promulgate means to calculate and publish a Mod.

Any Rating Bureau’s system increases the Mod more if a company or organization has multiple small claims where the claim was considered an indemnity claim.  A number of small indemnity claims will increase the Mod more than one big claim.  Why?

The Mod systems look at the number of claims increasing in a policy year.  An employer’s risk of one or more of those claims as turning into a larger file increases if there are many claims in a policy year.

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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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