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.
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)
- Data is initially valued 18 months after the policy inception date – the extra six months is for claim development
- 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.
- 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
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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