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Rate Bureau Calculations Using WCRI Numbers Show Mod Increases


Using Rate Bureau Calculations on WCRI’s Data – Whew!

Most Rate Bureau calculations make people daydream or roll their eyes back in their heads just before they start to drift off to sleep.  I have concocted  a few statistics using WCRI’s astute statistics and WorkCompCentral’s great data analysis.

rating bureau calculations mad scientist graphic
Public Use License – JJ

WCRI (Workers Compensation Research Institute) published a plethora/cornucopia of data at their annual conference in Phoenix.   Elaine Goodman from WorkCompCentral wrote an article on March 18, 2019.

The article had  a few interesting numbers in it when Elaine extracted out the data.

I cannot link you to the article as it is behind a paywall.   I think WorkCompCentral provides some of their articles gratis.

The WCRI data – OVERALL AVERAGE  – was $42,000 per Workers Comp claim.    Elaine’s article  pointed out that 15% of the expenses were for benefit delivery.

The rule for Experience Modification Factors (E-Mods X-Mods)  cuts out any expense beyond medical or indemnity payments.  So let us use a little multiplication.   $42,000 * .85 =  $35,700.

$35,700 – on the average- would be included in most of the Mod calculations for each claim.

Primary and Excess Loss Rate Bureau Calculation

Most states have 15,000 as the Primary loss part of the claim.  Some states have a higher primary loss figure.

So -the 15,000 Primary Loss part of the claims would be included in an average claim with $20,700 as the Excess Loss.   Hang with me here.

  • $15,000 Primary Loss – where your company’s Mod gets no discount
  • $20,700 Excess Loss – the discounted part of the claim (in a way)

The Primary Loss goes directly into your E-Mod equation.   The Excess Loss has a discount of  .75, so  20,700 *.25 = $5,175.

In the average claim, the primary loss maximum is reached at $15,000.   The average Primary + Excess Loss = $20,175.      

The Rate Bureau calculations have such things as the ballast to make sure your company does not get hit with the full Mod increase.

Self Insureds Have No Calculation (Then again)

Self insured employers have no calculation as they are outside of the Rating Bureau calculation.   Hold on, though as they still have to pay the whole $42,000.    Paying $42,000 out per lost time claim could heavily affect the self insured employers budgeting process.

Bottom Line If Confused By Above Figures

The average claim whacks your Mod figures by hitting your company with a $15,000 full bore and then another $$5,175.   If that does not cause you to think about increasing your safety efforts, nothing will.   Trying to apply loss reduction strategies that we provide to clients after the fact can only do so much to help an employer, or even a self insured.

The best way to keep your company’s workers comp premiums at an acceptable level is to make sure that the accident never happens to your employee.   If you take $0 in the formula, then everything is $0 regardless of the rate bureau calculations.


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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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