JL_risklogo.png

Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Workers Comp Statistics Madness Shocker Appears Last Week

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

How Can Workers Comp Statistics Madness Be Cured?

One of the supposedly important Workers Comp Statistics based articles appeared  last week.   The study and article compared  (Affordable Care Act) Medicaid expansion states with states which decided not to allow the expansion.   The conclusion drawn was:

Tag workers comp statistics Madness Graphic
StockUnlimited

States that allowed Medicaid expansion under the Affordable Care Act experienced a lower Workers Compensation Loss Ratio than the states that did not allow Medicaid expansion. 

I coined the madness term back in 2013.   The madness originated from other articles and studies, not insurance or WC. 

Cutcompcosts.com and J&L Risk Management Consultants decided to not mention the company in this article.  We wished to avoid a lawsuit by pointing out the main shortcomings of the study.  

  The main thesis consisted of comparing the Workers Comp Loss Ratios <<<not one of my favorite workers comp statistics.   The reason why consists of better statistics (hundreds) provided by actuaries and rating bureaus.    If you disagree, please use our contact us or comment on the article.   Many proponents think it is one of  the best workers comp statistics.   I think otherwise. 

Diagram of workers comp statistics Graphic
StockUnlimited

The researchers often miss the intervening statistic.   The old study example of ice cream sales compared to assaults comes to mind.  The more ice cream sold equates to higher assault rates.  However, the Summer is the intervening statistic or :

  • Higher Ice Cream Sales = Summer
  • Summer = Higher Assault Rates<<<due to more people outside in public
  • So, higher ice cream sales results in higher assault rate 

Studies of this type litter the Internet.  That concerns me.

Workers Comp has been rated by using the Experience Modification Factor since it began – well, in the 1930’s.   If you search the J&L Risk Management website, you will see many articles on the E-Mod

The E-Mod is a delayed system.  You cannot tell actually what happened fully in any state with WC until 4 years after a policy commences.    The aforementioned loss ratios are not designed to be a rating factor of any type.  My actuarial background says no.

If your company is self insured, then the Loss Development Factor (LDF) reaches further into the past – up to 10 years.   To say the Loss Ratio produces a premature measurement is a large understatement.    

Therefore, as with ice cream and assaults,  one should examine other intervening variables – LDF or E-Mod.  Workers comp statistics can be great – with the right ones. 

©J&L Risk Management Inc Copyright Notice

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Table of Contents

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

Subscribe

Get the latest workers' comp news FREE!

Name
This field is for validation purposes and should be left unchanged.