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NCCI Split Point Debate – Which Employers Will Take the Hit?


NCCI Split Point Debate – Employers End Up Taking The Hit

The Split Point Debate points to employers taking the hit.  I had an interesting question earlier this week on the upcoming NCCI Split Point changes. Over the last few weeks, I have received quite a few emails on how the split points will affect an employer’s E-Mod. I am sure that you have heard of the upcoming changes. If not, please follow the link in the first sentence and this link on the 2013 E-Mod calculations.

Emoticons with Red Comments icons Split Point Debate Employers Take The Hit
(c) 123rf.com

The main concern now is how an employer will be affected in the upcoming year with the split point doubling from $5,000 to $10,000. The split point is now $5,000 as the primary loss and any amounts after the split point is the Excess Loss. There is a built-in discount factor that kicks in when a claim reaches $5,000. The discount factor is a saving grace for an employer with a few large claims.

NCCI and the rating bureaus have built the Workers Compensation E-Mod system around penalizing employers that have many small claims. Statistics have shown again and again that a certain percentage of small claims will eventually turn out to be large claims. I have seen this in loss runs over the years. I agree with that assumption.

Which employers will see the most increase in their Mods after 1/1/13 – the employers that have a large group of claims between $5,000 and $10,000. There will be no discount factor on these claims. It is true now that six claims with a $5,000 incurred loss will affect the E-Mod as much as one $100,000 claim.

Graphic Split Point Debate Man Holding Placard

The new changes will change that statement to six claims with a $10,000 loss will affect the E-Mod as much as two $100,000 claims. I am making a blanket statement as each state has its own discounting factors, so this may not fit in all states. However, the concept is true and correct.

If you are not one of my weekly newsletter readers or read the blogs as they are published, I encourage you to go down the right side of the screen and use the search box and search for NCCI changes. I have written numerous posts on this subject.

The NCCI has said that only 18% of the employers will be affected negatively. I am not sure if I agree or disagree with that figure. I think we may have to wait a few years to see the full effect.

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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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