Recent Reader Question – Loss Run Numbers and Experience Mod Sheets Confusion
One of the most frequent questions that we have received over the years is why the workers’ comp loss run numbers never match the info on the Experience Mod Sheets. Let us look at three reasons why this happens during a loss run review.
I was performing a loss run review for an agent-client that caused me to write this article. Matching up the loss run to the Mod Sheets was quite a task as all three of the below instances occurred with the review.
Loss Run Numbers Are Current – Rating Bureau Mod Sheets Are Not
If you have online access to your claims or can download the loss run numbers on demand, the information that you have is very current.
If you do not have online access to your claims, ask your carrier or agent for a username and password for access. Many articles covering online access advantages are covered on this website such as this article.
Experience Mod Sheets are dependent upon the insurance carriers’ data reporting departments supplying timely information to the Rate Bureau (NCCI, WCIRB, and others).
The Experience Rating period delays the reporting of the loss run numbers an extra six months. This allows claims development for an extra six months.
Allocated Expenses Do Not Count on Mod Sheets
Allocated Expenses (ALAE) are the third set of numbers that you will see in the loss run numbers. ALAE means the carrier’s cost of handling the claim such as defense attorney or medical bill processing fees. The rating bureaus decided long ago that ALAE should not figure into the Experience Mod.
On some losses, ALAE can be as large as the indemnity or medical columns on the loss runs. I reviewed one over the weekend that had over $30,000 in ALAE. The indemnity and medical totaled $28,000. This occurs more now than in the past due to the severity of claims increasing every year.
Carriers May Use Partial or Different Claim Numbers
Some claim numbers may be a little different when comparing the worker’s comp loss run numbers. Claim numbers can be up to 40 characters long. Rate bureaus vary on the length allowed for claim numbers. From what I have seen, the claim numbers are truncated at 20 – 25 characters.
Loss run reviews can take time to accomplish if you decide to compare them to the Experience Mod sheets. Do not rush the comparison.