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Large Loss Caps – How Do They Affect E-Mods (X-Mods)?


The Large Loss Caps Effect On Premiums

Capping the large losses incurred by an employer is one way for a State Rating Bureau or NCCI to help control  Workers Comp costs.  Large loss caps function as a stop gap measure to keep one claim from completely harming an employer’s EMod (XMod).

Picture of Workers Doing Large Loss Caps Concept
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For instance, if an adjuster sets the reserves on a serious file to $385,000, the complete amount will never impact the employer’s Mod.   If the state’s cap on any loss is $175,000, then the employers E-Mod will never be impacted fully.   The $175,000 would be the loss that is input into the EMod formula.

As I have mentioned very often in the past, the idea of the Experience Modification system is to penalize the unsafe employers with repetitive injuries and to lessen the impact of one or two very serious claims.

I was recently reading that NCCI had increased Illinois large loss caps (limitations) almost 300% in the last 11 years from $133,000 to $370,500.  Unless I am mistaken, IL now has the highest ones in the nation.

Picture Businessman Watching Computer Screens Large Loss Caps Back View

The loss caps can be viewed as another method of keeping a safe employer with one bad accident from paying out more premiums than an employer with large group of smaller accidents.   The State Rating Bureaus and the NCCI have this concept as one of the underpinnings of their respective E-Mod systems.

If you have access to your Workers Comp loss runs, there is a very quick way to tell if your company has had one of the caps limit a loss.  Most State Rating Bureaus and the NCCI will note it by a “#” next to the total incurred figure.

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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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