E-Mods Concern – NCCI Split Point
Many of the split point changes by NCCI are starting to hit the radar screens. I received this question last week from one of our blog readers on split points.
“We have a .98 E-Mod. Our E-Mod has always been between .90 and 1.0 since we have been in business.
Will the new rules concerning E-Mods cause ours to go over 1.0?
If so, we would look a large chunk of our business as we would no longer be able to bid on government contracts that require a 1.0 or less Mod. ”
My answer – Your E-Mod could go over 1.0 without the new NCCI rules if you had a bad claims year. If not, then from everything I have seen, the answer would be no.
You may want to check my initial post on the NCCI split point updates that I posted a few months ago. The NCCI rules are not designed to penalize a safe employer.
Your company has a Mod of less than 1.0 which means you are safer than the same company doing the same type of work. Your safety program is to be commended.
NCCI and the State Rating Bureaus have always structured their E-Mod (X-Mod in California) to penalize the unsafe employers that have many accidents.
Their view is the more accidents a company has over time, the more likely that a few of them will turn into serious claims. I have seen this occur in files for years.
You may want to check out my earlier post on Loss Limitations. Even if you have one serious accident, you are not penalized that heavily.
If your company has many accidents compared to a similar company, the E-Mod system will increase your premiums over time.
We assist many employers with after-the-fact E-Mod reductions. The best way to reduce your E-Mod or to keep it under 1.0 is to keep your safety program in place.
I have seen many employers reduce or even eliminate their safety and risk management departments due to this rather rough economy. This is a sure way to have your Mod increase to an unacceptable level.
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