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Experience Mod For Next Year – Ruined By Big Claim?


Experience Mod Question From Article Reader

The Experience Mod system- while seemingly complicated and full of penalties – has a built in algorithm that keeps one very serious claim from ruining your insurance budget.

Money And Calculator Experience Mod Budget

In fact, your Mod for next year will not be affected whatsoever by the one big claim you just experienced this year.  The E-Mod system is a delayed system. You should be budgeting for the big hit to take place the second policy year after the claim occurred – in most cases.

One very important concept is that claims will be around for Years 2, 3 and 4 after the date of the claim.   Please note that I am talking in generalities.   There are many specific and state-specific rules that could change the Years 2,3, and 4 statement.

Maximum total claim amounts will also help keep your E-Mod or X-Mod lower.  Maximum total claim amounts are the maximum  Total Incurred amount that a claim can add into the Experience Mod.   The maximums are state-specific.

One part of the equation that sometimes catches employers off-guard is that the claims are additive into the Experience Mod.  If there happens to be a few smaller claims or if payroll falls, then the one serious claim can have more of an effect.   In other words, look at your loss runs to see the whole picture.  Focusing on the effect of the one big claim could possibly move the attention away from the claims that have a solid effect on the Mod when added together.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

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