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Workers Comp Carriers Fined For Late Reporting To Rate Bureaus?

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Surprising Number of Workers Comp Carriers Fined For Late Reporting

The number of Workers Comp carriers fined for late reporting in 2018 and 2019 may surprise you.   The late reporting referred to in this article stems from insurance carriers habitually reporting the claims data (Total Incurred) late to the rate bureaus – think NCCI, WCIRB, and the independent rating bureaus.

graphic zero number of workers comp carriers fined for late reporting
Public Use License – ivanovick solano

Are Workers Comp Carriers Fined For Never Reporting Data

The Pennsylvania Department of Insurance fined Brickstreet/Highmark over $200,000 last year for highly inaccurate – basically never reporting certain insureds’ data.

The reporting error sent the Pennsylvania Workers Comp rating system into a tailspin resulting in systemic premium overcharges.   I will save you having to read a long explanation of how not reporting data can cause employers to pay more in premium.

Pennsylvania has its own rating bureau – The PCRB.  The reporting errors were amplified as the PCRB has a smaller number of insureds than NCCI or the WCIRB.  The error was spread across a smaller data set.

Over the years, workers comp carriers fined for inaccurately reporting data remains very rare.

Other than that one instance noted above, carriers are rarely if ever fined for habitually reporting data late.  Reporting claims data late can have a disastrous effect on insureds’ Experience Modification Factors (Mods).

See The Mod Effect heading below to see how late reporting can wreck an employer’s Mod (one of our clients).

NCCI Rule on Reporting Claims Data Timing

The rule by NCCI (and most other rating bureaus) is: (paraphrased)

  1. Data is initially valued 18 months after the policy inception date – the extra six months is for claim development
  2. The first (data) report is due 18 to 20 months after the policy inception date – 60 days for the carrier to report the 18-month data.
  3. Subsequent reports for open, reopened, and newly arising claims are due in 12-month intervals, with up to a total of 10 report levels required.  30th month, 42nd month, etc.

You can read more in this PDF file on Unit Statistical Reporting  The manual comes from NCCIs Annual Data Reporting Conference.  I try to attend every year if possible.

Mod Effect – An Example

Formula of Workers Comp Carriers Fined on Black Board
Wikimedia Commons – alegri

One of our clients started using J&L’s services after they received what they thought was their final Mod for 2020.   The Mod was actually a Contingent Mod provided by their agent.   Their Mod was .91 which represents a relatively safe employer.

The carrier reported late claims loss data after the employer received the first Mod.

A basic Mod formula is Actual Losses / Expected Losses.   

The employer was expecting  343,000 / 376,923   = .91 Mod. 

The employer could bid on government projects as their Mod was below 1.0 – this requirement shows up quite often in RFPs presently.

The carrier then late reports in payroll and losses after the next policy inception where the formula is now:

454,000 / 412,727 = 1.10.    

The employer then calls us to have J&L go through the Mod numbers.  We informed them that the carrier had reported their numbers late to the rating bureau.

The now client employer asked are workers comp carriers fined for this situation?  I said no, almost never.

 

 

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2 Responses

  1. Dave from WCIRB,

    Thanks for reading the article/blog and for your comment with the link. Education is the reason I have written over 2,000 educational articles including many from the WCIRB. I wanted to go into Contingent Mods a little more, but articles over 700 words are very thinly read by our blog and newsletter readers. The WCIRB and NCCI have vast educational sections that are very helpful.

    I miss the in-person educational conferences the WCIRB provided – they were some of the best ones I have attended over the years.

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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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