Five Ways To Prepare – Upcoming Split Point Reserve Changes by NCCI
NCCI has already enacted the Split Point Reserve changes. In my opinion, the first year will have the most impact as the Primary Portion of the loss will double from 5,000 to 10,000. This will have a big impact on employers that have numerous claims.
NCCI has warned employers for many years that having multiple medium-sized accidents is going to be the most damaging to your E-Mod resulting in sharp increases in premium. I calculated how this would affect a random employer in the near future using live figures.
The following are five ways to avoid such a whack to your Workers Compensation program:
- Understand when the rule is effective for your state or states – not every company will automatically take the hit. I covered the new NCCI rule dates in a previous post.
- Loss Run Review – it may be too late this year due to your Unit Stat date. If you still have time before your Total Incurred is recorded, then this will save your company $$$. If you have online access to your claims and reserve change data, you already are one step ahead.
- Enact or improve your safety program – repetitive accidents within a policy year are going to cause your company to pay massive premium increases. You can pay the $$ to enhance your safety program, or you can pay your insurance carrier 400% over what you would have invested in safety and risk management.
- Explore alternatives to regular Workers Comp policies – PEO’s, captives, small and large deductibles, and risk retention groups are a few of the alternatives.
- Companies that bid on contracts – your E-Mod may possibly jump to over 1.0. That may bar your company from bidding on or keeping certain contracts that require a 1.0 Mod or less. You can have your E-Mod calculated much earlier than the rating bureaus – we offer that service.
The main recommendation is to remember to not just let the changeover happen without understanding exactly how the NCCI change will affect your E-Mod for the next three years. Ask questions often.
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