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Split Points – Largest Workers Comp Concern Presently

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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.

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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
Business Strategy Concept Largest Workers Comp Concern Vector
123RF

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.

    Graphic of Four Black Arrows Largest Workers Comp Concern Split Points
    (c) 123rf.com
  • 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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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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