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Workers Comp Success (or Failure) Bottom Line Measurements


Workers Comp Success Bottom Line Measurements

Workers Comp success (or failure) bottom line measurements are readily available for employers.  I have read a few blogs and received questions recently concerning how a Workers Compensation program can most easily measure its success or need for improvement. This is a very complex measurement as there are so many variables that are not in the control of the personnel or departments that administrate the program.

Picture Of Businessman In Finish Bottom Line workers comp Success

I am not a great advocate of benchmarks as each company operates differently. That is the nature of the business world. I have seen many benchmarking studies that have tried to compare apples with oranges using the same comparison system.

Four sets of numbers measure how a Workers Compensation program is working.

They are:

  1. E-Mods/X-Mods
  2. Current reserve levels for claims included in the Experience Period
  3. Employer measurements provided by insurance carriers such as lag time, etc.
  4. Bottom line – premium

I want to be fair to self-insureds as I am often reminded to include the self-insurance angle on my posts.

The measurements for self-insureds are:

  1. Loss Development Factors (LDF’s)
  2. Current reserve levels (including all claims)
  3. Same as above #3
  4. Bottom line – payments made over the life of the claim

There are differences between measuring the voluntary market where a premium is paid and a self-insurance program. The two types of programs should never use the same internal measurements. Other programs such as large deductibles and captives should use a hybrid mixture of the two lists.

Picture Of Workers Comp Success Crossing Winning line

The one area that ALL comparisons should possess is a consistent measurement. I have seen Risk Managers lose their jobs over a very high E-Mod even though the RM was not even on the job when the variables were set in place. After the RM was terminated, the E-Mod then decreased sharply. As I have posted often, Workers Comp is a heavily delayed results system.

Whether we like it or not, the E-Mod or LDF is the “proof is in the pudding” measurement. It is the system in place. As Charles Givens wrote in Super Self, “If you want to win, you must play by their rules.”

I will cover the two lists in the next post. Workers Comp can be boring. I do not want to add even more to that boredom this evening.

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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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