Now more than ever, safety saves hard dollars

This year, the National Council on Compensation Insurance (NCCI) is making a major change to the way your workers’ compensation insurance premium is determined. This new change penalizes lax safety policies and frequent claims by weighting claims costs more heavily in your experience modification factor (mod) calculation. Higher mods will push premiums up significantly and will follow businesses for three years. Check out the chart below for the effective date in your state.

2013 Effective Dates of NCCI’s
change to primary and excess losses*
State Effective Dates
Alabama March 1
Arkansas July 1
Florida January 1
Georgia March 1
Kentucky October 1
Louisiana May 1
Mississippi March 1
North Carolina April 1
South Carolina September 1
Tennessee March 1

* This list is not comprehensive and contains only states in which Summit-managed carriers write business. Note that as of the date of this printing, Texas has not filed this change.

How it works

To determine your experience mod, each claim is divided into a primary and excess portion. Primary losses are counted in full, but only a percentage (typically 5 to 15 percent) of the excess portion is included. For the past 25 years, the split point—the line between primary and excess—has stood at $5,000 per claim, despite inflation.

This year, NCCI is doubling the split point to $10,000, which means that the first $10,000 of every loss will now be allocated as primary. For example, a loss of $15,000 will weigh in with $10,000 in primary losses, and $5,000 in excess losses.

In 2014, the split point will step up to $13,500, and in 2015, the split point is expected to grow to more than $15,000 (with adjustments for inflation).

Safety’s impact

Ultimately, these changes mean that the employers who are safety conscious will be rewarded. Safe employers will see a reduction in their mods; those teetering can go either way; those who aren’t safe will definitely see an increase.

Even though these changes are becoming effective on various dates, the claims data that the NCCI will be using for your 2013 mod is from your 2009, 2010, and 2011 policy years, so it is important to remember that safety today will positively impact your mod over the next several years. Now is the time to create a safer workplace.

Want to know more about the NCCI split-point change? Check out past editions of the COMPpress. (Click on Employer Resources and then Print Materials.)