Largest Workers Comp Concern Today Seen As Split Points
The Split Points became the Largest Workers Comp concern presently. I am presenting at the North Carolina Mid State Safety Council conference tomorrow. A few weeks ago I was contemplating what would be the largest concern for safety, human resource, and risk management personnel.
After speaking with a few of my peers and our clients, the subject of the upcoming NCCI and State Rating Bureaus (other than CA, OH, and NJ) split points came up as the most popular topic of concern. My question to my peers was “Why are split points the topic that is causing the greatest concern presently?”
I received many different answers. The top one was the way our Workers Comp is calculated will now change very quickly at our next renewal.
The other concerns were:
- A new variable that may cause an increase to our E-Mod that is beyond our control
- We cannot budget for the unknown increase, if there is going to be one
- There is a 100% increase in the Primary Loss the first year
- There are subsequent increases in the Primary Loss for the next two years
- If we go over 1.0 on our E-mod, we cannot bid on government contracts
- We are confused as to whether or not our next policy renewal will be affected
When I looked over all of the concerns I had received and went back to the responses to my previous posts on this subject, I think the main area of concern can be summed up by saying there is now an unknown variable thrown into the mix that a company cannot prepare for in the future.
My response to that concern would be:
- NCCI said only 18% of the companies would be affected. I analyzed one of the reports that came up with this %. I had thought it would be at least 25%
- If your E-Mod is .9 or lower, you may actually see a decrease in your E-Mod if your Workers Comp claims status is not worse than in the past
- If you have many smaller claims (less than 10,000), your E-mod will likely increase heavily no matter your current E-Mod. The new rating system is going to very heavily penalize employers with multiple injuries.
- Your safety and risk management departments are now going to become more of a critical component to your business. If your company has considered WC just a cost of doing business, you may want to get out the checkbook and make sure you have plenty of checks.
- If your company has an E-Mod of 1.2 or higher, you need to take drastic steps to reduce your injury rate.
- The reserves on all of your Workers Comp claims will now be even more important. If you do not have online access, it may be good to check with your carrier to see if online access is available. When choosing among carriers at renewal, online access to your WC claims is now even more important
- Alternative insurance arrangements such as large deductibles, PEO’s, self insurance, loss groups, risk retention groups, and captives may now be more attractive and cost effective
- If your company is in the Assigned Risk Pool because you cannot find coverage in the voluntary marketplace, you need to immediately institute or increase the efforts of your safety program. You may also want to begin considering viable alternative insurance arrangements.
If you are not in a state that is going to be affected by the split point changes, then now is a good time to start preparing for the change. Most states eventually follow NCCI’s lead.
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