Archives for November 2012

E-Mods and X-Mods Affected By Lack of Technology

November 29, 2012 By JL Risk Management Consultants

Lack Of Technology – E-Mods and X-Mods

All E-Mods and X-Mods are affected directly by technology. In my last post, one of the statistics that jumped off the page caused me to write this blog separately as there is a study that finally relates the lack of technology by Workers Comp carriers and higher Emods (Xmods in CA).

123RF

The exact quote from the article is:

While 92% of the claims executives we surveyed said they could reduce loss costs by increasing consistency in claims handling, most of them are not in a position to do so because their core claims systems are either too old or not adapted

I found this quote startling on its own merits. The other area of concern is the high level of agreement at 92%. I was never able to correlate outdated Workers Comp claims systems with the likelihood that loss costs (therefore Mods). After reviewing a large number of claims on different systems, I can understand why this number was so high.

Over the past few years, I have posted very often on why having online access to all claims data is so important. If your company or organization does not have online access to your data, it may be a prime time to investigate if you have access privileges. The responsibility to have accurate claims data often rests with the employer.

Your E-Mods and X-Mods are tied directly to the claims data. The claims data (Total Incurred) is what is reported to the NCCI, WCIRB, or State Rating Bureau to calculate your Mod. Consistency is claims handling and the resulting data is becoming ever important as employers look to cut workers comp costs in this tough economy.

Close up of hand typing e-mods and x-mods computer keyboard

Wikimedia Commons – MoD/MOD

Investment company clients along with our employer clients always ask me the #1 concern I have for the Workers Comp market in the future. One of my main concerns that I always address is the lag time for Workers Comp claim system updates. How can an adjuster that is accessing five different claims systems actually be that consistent with claims handling?

As I pointed out in the last post, there are some adjusters that have to access eight claims systems to process a claim. That is an enormous burden. The adjusters’ time could be better used elsewhere – plain and simple.

Why am I so concerned about this one area? I used to be a systems engineer for two different computer companies. There are better claims systems out there even if the migration from one system to another is seen as a large barrier.

©J&L Risk Management Inc Copyright Notice

Workers Comp Systems Are Antiquated At Best

November 26, 2012 By JL Risk Management Consultants

Workers Comp Systems

One of my main concerns in working with clients is the basically outdated Workers Comp systems that have to be trudged through to even perform basic operations. This article on outdated Workers Comp systems analyzed what Workers Comp claims workers already knew – most systems are severely outdated.

123RF

When we advise investment groups or are analyzing a claims system, I am sometimes shocked at the system in place. Workers Comp systems are actually even worse. When I attended the recent LRP National Workers Compensation Conference in Las Vegas this year and last, I was searching for something new in the claim processing arena. While there are great system providers, I still did not see one that I would call cutting-edge.

The aforementioned article centered on a study of claims executives. Some of these are not necessarily directly related to Workers Comp. However, there are some that are “spot on. ” Some of the almost shocking results were:

83% of claims executives thought their systems were outdated and they needed the IT departments help to make any changes
Half (54 percent) of those surveyed say their core claims systems are more than five years old and almost one-third (32 percent) of respondents say they rely on more than five different applications to process claims. How can someone be productive if they have to run five different systems? I know of one carrier that presently uses eight.
Wikimedia Commons – Dreamsoffuture
More than three-quarters (78 percent) of respondents say they are on a path to upgrade their claims systems; among these respondents, almost one-third (31 percent) say the last major upgrade was made more than three years ago.
Two-thirds (66 percent) of claims executives surveyed think their claims systems are not optimized to collect and analyze the growing volume of data available – such as insights about consumers from social media and usage data collected by means of telemetry and Global Positioning System – which would enable them to refine and improve claims management.
More than three-quarters (78 percent) of respondents say their claims organization is not equipped to manage new forms and level of risks such as cyber-crime, terrorism, increased frequency of severity of natural catastrophes.

I will cover one statistic in my next post that will have employers and some claim adjusters shouting at their screens. It is a shocker.

©J&L Risk Management Inc Copyright Notice

Premium Audits – How Far Back Can They Go Into Your Policy Years

November 20, 2012 By JL Risk Management Consultants

Premium Audits May Go Back Into The Past

Workers Comp premium audits can be a harrowing situation. This can be worse when you current or prior carrier decides to re-audit your policy after they already had one shot at it. The very short question in the post title came in last week from California.

Old Clock Premium Audits At The Wall Old Picture

Wikimedia Commons – Paragbhagat8

California handles their premium audits a little differently on time limits. My rule of thumb is the current policy year and:

Three years into the past for most states
One year for California
Two years for Ohio

As an example if your Workers Comp policy period looked something like this:

August 1, 2007 – August 1, 2008
August 1, 2008 – August 1, 2009
August 1, 2009 – August 1, 2010 – not in OH or CA
August 1, 2010 – August 1, 2011 – not in CA
August 1, 2011 – August 1, 2012
August 1, 2012 – August 1, 2013 – current policy

StockUnlimited

The ones that could possibly be audited in most states are in bold and italicized. Most audits are only for the last year’s policy that just expired. While it is legal to go back more than just the last year, I have always found that to be a questionable subject unless the carrier has some reasonable explanation.

The same time span is comparable to IRS audits. This may have possibly been where the origination of the rules for auditing workers comp policies. The basis could also have originated with Unemployment Insurance.

We had one caller from October that says there is a California carrier wanting to go back 10 years to re-audit their policies. From what I can tell, this employer had completely opened up their business books to the carrier’s premium auditor every year.

We are currently looking at that business’s payroll and business books and have found nothing beyond what the original auditor had found in their premium audit. In fact, we found a few inconsequential overcharges in the initial stages of the review.

©J&L Risk Management Inc Copyright Notice

Giving Thanks For Workers Compensation System That Feed Us

November 20, 2012 By JL Risk Management Consultants

Giving Thanks To The System That Feeds Us

This is my giving thanks for Workers Compensation. Workers Compensation with all of its trials and tribulations is sometimes overlooked for fueling a very large industry – insurance services. We analyze Workers Comp to the nth degree on a claim-by-claim basis or as an intricate part of society.

Wikimedia Commons – Stetcher Litho Company

If one wants to see the diverging opinions on almost any subject on Workers Comp, just check out the LinkedIn posts in some of the groups such as Workers Comp Analysis. We, in this arena, regardless of outlook on this very defined area of insurance should be thankful.

There are so many employees, consultants, and regulatory agencies that depend on Workers Comp as an avocation. Almost all of us did not plan to work in Workers Compensation. I took my first job in insurance as an all lines claims adjuster trainee many years ago. Workers Comp was not even considered the most important coverage for business owners when I first adjusted claims.

Technology has enhanced Workers Comp over the years. However, I do not think that technology will ever replace very many functions in any department. This area of insurance leans so much on the basic communication process.

Workers Comp does provide some sort of employment stability in an otherwise very unstable job market. We all become very frustrated at times with the world of Workers Comp. Sometimes, it is best to look at the forest instead of the trees. This industry has taken its bumps and bruises during the Great Recession. WC is still standing and doing well. That is the one main point for which to be thankful – stability.

©J&L Risk Management Inc Copyright Notice

Workers Comp Advisory Rate Semi-rant – Look at Numbers

November 15, 2012 By JL Risk Management Consultants

Advisory Rate Semi-rant – The Numbers

I apologize for my advisory rate semi-rant. A Workers Comp Advisory rate is just that – advisory rates. Much attention is given to the publication of advisory rates. They actually mean nothing whatsoever to what any company in that state will pay for Workers Comp

Picture Of Hand Presenting Semi-rant Coins And Percentage

StockUnlimited

insurance.

I have used advisory rates as a bellwether for certain states’ rates changes. I recently posted an article on Iowa’s WC advisory rate increases.

The person or persons that actually decide what rates an employer will pay are:

Actuary
Underwriter
Senior Management

NCCI, the WCIRB, or any state rating bureau is not in the business of setting carriers’ rates. Advisory rates are just that – advisory in function only.

Numbers On Cricket Scoreboard Workers Comp Advisory Rate Ground

Wikimedia Commons – Ed g2s

I will give you an example of how senior management for a company can offset rates. As an example, let us say that Nebraska has decided to reduce their advisory rate 5% after a recommendation from NCCI. The insurance carrier can then file to have their rate deviated from the advisory rate at 5%+. This equals to a 0% rate decrease.

The deviated rate may also be called a LCM or Loss Cost Multiplier. Some states call their workers comp advisory rates Loss Costs. The insurance carriers will then file the LCM they wish to charge their insureds. An example of a LCM is 1.21 which means the carriers wishes to file their rate at 21% higher than the advisory rate.

Insurance carriers can file a different deviated rate every year or under special circumstances. Carriers are not locked into any rate deviation. I have rarely seen an Insurance Commissioner or State Workers Comp Department reject a rate deviation or LCM.

The employers are left wondering what happened to the advisory rate decrease that was published earlier in the year. There are certain carriers that may use advisory rates as their rate and not deviate from it. I have rarely, if ever, seen this happen.

There is a certain insurance carrier that has filed for a 211% deviated rate for quite some time. The carrier does take on very risky companies. That could be partially why they have filed such a high deviated rate.

©J&L Risk Management Inc Copyright Notice

Iowa Approves 7.9% Rate Increase In a Down Economy?

November 15, 2012 By JL Risk Management Consultants

Iowa Approves 7.9% Increase in Rates (Ouch)

The state of Iowa Approves a 7.9 percent rate increase. NCCI recommended that Iowa increase its Workers Compensation rates by 7.9% (3% effective 01/01/13 + additional 4% on 07/01/13). Iowa subsequently approved the rate increases. This was rather surprising in such a down economy. Iowa for many years bucked the trend that a medical fee schedule is needed to keep Workers Comp costs in check.

Graphic of Iowa Approves Gold percentage and increase arrow

123RF

The trend-bucking may be coming to an end very soon. I have always said states that do not have a WC fee schedule end up costing employers more than other comparable states. For some reason, Iowa stood alone in not having a medical fee schedule while keeping medical costs in check.

The bell may be tolling for Workers Comp medical costs in Iowa. Up until 6 months ago, Iowa was still defying the medical fee schedule = lower Workers Comp costs scenario.

The effect of no fee schedule seems to have taken hold in Iowa. According to NCCI:

58% of total benefits in Iowa are now medical.
The % of medical benefits is increasing faster than other states
Overall costs are quickly catching the regional and national averages
The change in medical benefits greatly exceeded changes in indemnity benefits
No other reasons such as medical inflation, etc were found as root causes of the increase
StockUnlimited

This is the normal time a state starts looking into a medical fee schedule. Many states that have considered WC fee schedules usually wait until the situation is dire then switch to one.

Iowa should definitely consider having a medical fee schedule. It is very easy to copy off another state and institute that fee schedule with follow-up adjustments.

The old warning concerning medical providers refusing to treat Workers Comp patients is very minor. I have not seen that situation occur very often after a state enacts a Workers Comp medical fee schedule.

©J&L Risk Management Inc Copyright Notice

Texas Workers Comp Payments Decrease Due To Reforms

November 15, 2012 By JL Risk Management Consultants

Texas Workers Comp Payments Are Lowering

The state of Texas workers comp payouts decreased for the first time in years. According to WCRI, the payments decreased overall by 4%. This is a very large one year decrease in the current Workers Comp environment.

Picture Of Hand Thumbs Down Texas Workers Comp And Bar Graph Decrease

StockUnlimited

Texas enacted a large group of workers comp reforms in 2008. As I have mentioned often, the results of a reform measure will not usually appear fully until three to four years after a new law or court case changes the WC environment in a certain state.

Medical payments decreased by 2%. I decided to look into this further as there seemed to be a few variables that were not mentioned as hospital network payments had actually increased. I found this article on a major impact of the Texas reforms.

The article said it best –Evidence-based treatment guidelines are one method used to control medical costs in the workers’ comp system.The Texas Department of Insurance announced that, as of May 2007, use of the Official Disability Guidelines – Treatment in Workers’ Compensation was required for the treatment of all injured workers not covered by a certified health care network.

Businesswoman Texas Workers Comp Drawing Graph Chart Decrease

StockUnlimited

Low back injuries — decreases for the likelihood of surgery, physical medicine, chiropractic manipulation, other radiology, or an injection; a decrease in the number of visits for physical medicine, chiropractic manipulation, other radiology or injections; an increase in the number of services per visit for physical medicine; and a decrease in the number of services per visit for chiropractic manipulation.

I found it interesting that WCRI itself had said in the original article the recession had an effect on the WC environment. However, an article on the WCRI website written by Risk & Insurance on the same WCRI study pointed out what I consider the real reason for the decrease in benefits.

Having better medical control of the low back injuries was likely the cause for the decreased payouts on both indemnity and medical benefits.

One area that I disagreed with the original WC article by WCRI is the recession is the cause of any decrease in indemnity payments. As I am originally from that part of the country, I can attest that there is an oil boom of sorts in TX that would easily offset any effects of a recession.

©J&L Risk Management Inc Copyright Notice

Could Opt Out Programs End Workers Comp As We Know It?

November 13, 2012 By JL Risk Management Consultants

Non-Subscriber or Opt Out Programs – Work Comp Doom?

The Non-Subscriber or Opt out programs could end Workers Comp? This year’s LRP Workers Comp Conference in Las Vegas was very informative. I was searching out any new technologies, services, or products in the Workers Comp arena.

The vendor area was surprisingly headed towards consolidation. Some of the services that were being added in by consolidation were very interesting. Most of the services and even the new combinations of services had all actually existed in Worker Comp in the past.

One area that was not necessarily new, but was heading towards a very rapid expansion was opt out or non-subscriber services for Workers Compensation. The one area that astounded me was the fact that Workers Comp is treated more like a benefit or investment than a cost of doing business.

One of the reasons I deviated from obtaining a CPCU and pursued a ChFC designation is that I had always considered insurance premiums as more of an investment than a cost. I wanted to understand more fully how insurance fits into the overall budget, not just as a necessary evil of doing business.

There was a section on the last day of the conference on non-subscriber services for Workers Comp. The main two panelists were from Hobby Lobby and Dollar General. I was surprised what the two employers were allowed to do with their Workers Comp programs – all in good way.

Wikimedia Commons – hattiesburgmemory

The two companies had a history of using a non-subscriber service in TX. The risk manager from Hobby Lobby had mentioned the fact that Oklahoma will likely approve non-subscriber services.

The cost savings between traditional WC and the non-subscriber services was astounding. I will post a story tomorrow or more of the intricacies of how the two companies administrated their programs.

I am traveling all day today and the info on the non-subscriber section is in my checked bag. One thing I wanted to point out is even though non-subscriber services have been in existence in Texas for quite some time, I think many more states than just Oklahoma will look into these services.

There is a report on non-subscriber services by two Workers Comp reporters coming out very soon. I will comment on it after it is published and I have had time to examine it.

©J&L Risk Management Inc Copyright Notice

Premium Audit Workpapers – Employers Can Obtain Copy

November 8, 2012 By JL Risk Management Consultants

Premium Audit Workpapers – No Harm To Ask For Them

Premium audit workpapers are one of the audit items that are seldom provided to employers. I have also seen them provided to employers with the audit results or at the time of the premium audit bill. Along those lines, I received this question last week.

Wikimedia Commons – Niklas Bildhauer

Is it a requirement that the premium auditor provide our company with a copy of the audit workpapers?

I think we should first start off with the definition of the premium audit workpapers. They are handwritten or computerized step-by-step background notes of how the auditor calculated the premium during an audit. I have also seen a computerized or handwritten checklist, especially in California.

The auditor will usually record each step of their audit as justification of why they changed any of the payroll amounts. The audit workpapers are usually very organized and easy to read. It is a good place to review if there are questions on any part of the premium audit.

The premium auditor is actually required in most states to provide the employer with a copy of the workpapers. Paying for an audit without the workpapers would be similar to paying an electric bill without knowing how much energy was used by your company.

StockUnlimited

It is always a good idea to ask for them if the auditor did not leave the workpapers behind on a recent audit. An email to the auditor or your agent asking for the workpapers will usually result in your company being provided with a copy very quickly.

Once you have received the workpapers, it may be a good idea to scan over them to see how the auditor calculated your final premium bill. The workpapers should not really be that lengthy unless your company is very large, has many locations in multiple states, or is a temporary employment agency.

If, after reviewing the workpapers, you feel that your company was overcharged, you may want to contact a premium audit expert company such as J&L. The main thing is to not just write out premium checks if you do not understand the justification for the charges.

©J&L Risk Management Inc Copyright Notice

Workers Compensation Innovation At NWCDC Conference

November 7, 2012 By JL Risk Management Consultants

Workers Compensation Innovation – Little To None

Workers Compensation Innovation is one of the main areas I pay attention to when I attend Worker Comp conferences. I do not mean to disparage companies that are Workers Comp service providers. I am attending the National Workers Comp Conference in Las Vegas this year.

Picture Of Workers Compensation Innovation businessman with head bulb doing yoga

123RF

After visiting every vendor booth, I have found there is still little or no innovation in Workers Comp services. There are slight twists on old services. Last year, I thought that Insurcard was a great innovation. Insurcard basically loads the weekly TTD checks on a card that the employee can use just like a debit card. Their motto is Workers Comp checks are dead.

I met a rep for a vendor on a flight into Vegas that interested me. Even though they have been around for years, they have entered the WC market only very recently. Exogen actually uses ultrasound to accentuate bone healing. I was going to enter in some of their literature. They gave permission use the info from their website.

This may not be cutting edge treatment in Workers Comp. If any of my blog readers can come up with a new services or product in the Workers Comp arena, please email me and I will include it.

Rethink fracture treatment

EXOGEN gives you one big reason to rethink your approach to fracture treatment: faster indicated* bone fracture healing time. Studies have found that EXOGEN’s ultrasound bone stimulation may speed up bone healing for indicated* fresh breaks and treat non-union* fractures.¹ It’s the only device with a fresh fracture indication for radius and tibia fractures, and for fractures that won’t heal, it may prevent the need for further surgery.¹

The science behind EXOGEN healing

X Ray Of Bone Fracture Workers Compensation Innovation Graphic

Wikimedia Commons – Jmarchn

To speed indicated* fresh fracture healing or jumpstart the healing process for stubborn non-union* breaks, EXOGEN emits low-intensity, pulsed ultrasound (LIPUS) waves at the fracture site. These mechanical waves travel through skin and soft tissue to activate cells critical to healing.

EXOGEN works at every stage of the healing process by:

Encouraging cells (osteoclasts and macrophages) to remove bony debris and bacteria
Stimulating immature bone marrow to produce the bone and cartilage cells necessary to heal broken bones
Speeding the maturation and solidification of formed bone

Helps heal broken bones faster

Clinical studies have shown that EXOGEN may speed up bone healing of indicated* fresh fractures by 38%.Shown to speed cortical bone healing time by 58 days

Shown to speed cancellous bone healing time by 37 days

X Ray Of Workers Compensation Innovation Bone Broken

Wikipedia – Hellerhoff

It also helps heal 86% of non-union* fractures.

74.8% of humerus non-union* fractures
77.8% of clavicle non-union* fractures
84.5% of femur non-union* fractures
93.2% of scaphoid non-union* fractures
95.7% of hand/wrist non-union* fractures

Additionally, EXOGEN helps speed up bone healing in patients with certain risk factors — including obesity, advanced age and tobacco use — by as much as 50%.

Shown to heal 81.6% of smokers with non-union* fractures
Shown to heal older patients (≥30) ≈84 days faster

Obama or Romney – Vote For Workers Compensation?

November 6, 2012 By JL Risk Management Consultants

Workers Compensation Vote – Obama or Romney

Workers Compensation – would a vote for Obama or Romney be a vote for our industry? Well, we are finally here. I will miss the droning on off all the commercials. I live a battleground state so they airwaves and internet were flooded with so many irritating advertisements.

Wikipedia – The White House

In my humble opinion, there will be no difference if Obama retains or Romney acquires the Presidency. The main races that will heavily affect your Workers Compensation rates, laws, etc. are in the state races.

Workers Comp is a very individualized insurance offering. We can see that phenomenon when we compare , for example, California to Nevada or Oklahoma to Texas. One size does not fit all. I think that Workers Comp could be regionalized across zones of a type, but not across the United States.

Vector Graphic of Voting Concept Obama or Romney Workers Compensation

123RF

I coined the term – and it has been copied by other bloggers – on the Federalization of Workers Compensation. I had thought that the current administration would march over the top of WC and make it a federal program. That was not necessarily an error on my part.

Obamacare does not directly affect the Workers Comp industry. However, what was a wide river to cross is now a small stream. In my opinion, 24 hour healthcare (including Workers Compensation) could be easily attained by using the AFLAC model with some type of partial payment by the employee and a subsidy by the employer.

Often I am asked by many investing companies on consultations what would be the unknown factor that could cause Workers Comp market to change. I think it COULD be the healthcare companies absorbing the Workers Comp market.

I am often asked as to why this would happen. As well all know, the healthcare companies will now be limited as to profit in the health insurance market, but not Workers Comp or even the Property & Casualty markets.

Picture of Physician On Screen Health Obama or Romney Healthcare Companies

123RF

I am still under the impression that your State Senate, House, and Governors’ races will be the ones that will map out the Workers comp markets in the future. That is why I recommend looking into the candidates’ prior voting records on any bills that involved any type of insurance matter.

The bottom line is that whether President Obama or Governor Romney wins the election will not matter to Workers Comp except possibly to a very small degree. Your local state races will make the difference.

I have consulted on all states Workers Comp in the nation. Each state is unto itself on Workers Compensation. The one word to watch out for is reform as most of the time this means a major change to how you will do business in the WC industry.

Even though Workers Comp is the silent budget buster, for some reason it does not draw enough attention. On the Federal level, that may be a blessing in disguise.

Workers Comp Claims Spike – Easy Way To Handle?

November 1, 2012 By JL Risk Management Consultants

Workers Comp Claims Spike May Show Need For More Training

Does a Workers Comp Claims spike have an easy solution? In my last post, the learning curve was what I thought would be the reason for an upcoming workers comp claims spike or explosion in claims. Rookies tend to make mistakes, whether in sports or at work. I would also count workers that have not performed a job or job function as part of this group, even though they are not rookies.

Graphic Of Hand Push Botton Workers Comp Claims spike Easy Text Icon

StockUnlimited

New York, New Jersey and employers in many other states, especially construction and demolition, will likely see a spike in claims. The easiest way to handle this inflow of claims from an employer’s point of view is to have a few very simple strategies in place.

I am going to reiterate some of my Keys To Cutting Workers Comp Costs as these are easy to use in case of an accident:

ASAP First Reports – this is very important during a claims spike as adjusters may be overloaded. Get your reports in first.

Fax, email, or report the injury online ASAP.
If an employee is out of work, follow-up within two business days to see if your injury report has made it to the adjuster.
Note any questions or concerns by attaching a note to the first report of injury.

Picture Of Physician And Patient Workers Comp Claims spike Consulting

StockUnlimited

Dr. Network – the most critical key

This is the most critical part of any WC claim without question.
WC courts consider physicians the only impartial parties/witnesses in a claim.
A physician panel needs to be in place .
Treating physician controls medical cost, length of time out of work, and any permanent disability

Return to Work Program – employers sometimes forget this area when overloaded with work and claims.

The medical providers that are seeing the WC employees should know if you have a RTW program in place
Employees should know a return to work (RTW) program is in place.

Employee Treatment – your workers are still your employees even after an injury

Reduces fraud
Helps Return To Work program
An out of work employee is still your employee
Keeps employee in the loop

These four keys may seem very basic. However, we find that most employers with high E-Mod/X-Mods/LDF’s are not following one of more of these keys. Now is a good time to put them in place before the claims come rolling in quickly for your company.

Will There Be Spike In Workers Comp Claims Due to Sandy?

November 1, 2012 By JL Risk Management Consultants

Spike In Workers Comp Claims Post Natural Disaster

Hurricane Sandy could cause a spike in Workers Comp claims? New York, New Jersey, and many other states have felt the impact of Superstorm Sandy. The hidden increase in economic costs will occur when the rebuilding begins. I had coined the term “Hurricane Syndrome” after I saw a spike in the South Carolina Workers Comp claims I was handling after Hurricane Hugo.

Graphic of Spike In Workers Comp Claims Hurricane Sandy

I posted on the Learning Curve as being a bellwether for Workers Comp claim spikes when a worker uses a tool or performs some job duty for the first time. This can also be applied to the reconstruction of the northeastern states after Hurricane Sandy.

The Learning Curve will apply to reconstruction after a large storm as many labor-type workers will be doing jobs they may have never performed or have not done for a long time due to the economy.

There should be some type of claims spike over the next six months in at least New York and New Jersey at a minimum. Accidents that would not occur in a normal situation may actually happen when a massive labor force increase occurs in a specific area.

Fallen Tree Spike In Workers Comp Claims Typhoon Damage

Wikipedia – Joe D

As noted often in this blog, numerous accidents over a given period is much more damaging to the E-Mod (X-Mod in CA) than one or two major accidents. The Loss Development Factor (LDF) may also spike for self-insureds. The rating bureaus have all taken into account that numerous smaller accidents cost more over the long term than one large accident. The statistics of risk usually prove the rating bureaus’ assertions correct.

The Learning Curve has been around since the 1930’s. There has not been one study that contradicted the premise of less experience = more accidents. If one looks at almost any college-level book that covers business analysis, the Learning Curve will be in it.

My next post will cover how carriers/TPA’s/and employers can gear up for the increase in WC claims.