So, what is the impact going to be? In our next installment we’ll take a closer look at the anticipated first year mod change, and why the “best will get better, and the worst will get worse.”

(image from NCCI)

As you can see, 78% of mods will be ±5 points when you apply the $10,000 split point.

This masks the most important facet of this change: The best will get better and the worst will get worse. By making this change, NCCI is making the experience rating formula move more quickly up and down as loss experience changes.

Another important piece: The minimum experience mod that every business can reach will decrease because of the increase in expected primary losses. This means that EVERY business will have greater control over their costs.

If you can show them how to take control, you win.

These changes do not change some simple truths about the experience mod:

1)     The average mod is always 1.0. While a change may negatively impact an individual business, you can rest assured that there is another business whose mod was positively impacted in the same way. There have already been many words written about how the NCCI split point change is going to cause an increase in every experience mod. This simply isn’t true.

2)     The experience mod is the facility through which employers pay for their workers’ compensation claims, often at 100%-200% interest.

Workers’ compensation is the one line of insurance where businesses control what they pay. Business owners do not like to feel out of control. When you can help them exercise that control, you win.

Kevin Ring is the Lead Workers’ Compensation Analyst for the Institute of WorkComp Professionals, the Asheville, NC-based organization that trains insurance agents to help employers reduce Workers’ Compensation expenses. A licensed insurance agent, he leads workshops, analyzes Workers’ Comp programs and is the co-developer of CompImpact, a Workers’ Comp software suite that helps insurance professionals in working with employers. He can be contacted at 828-274-0959 or kevin@iwcpro.com.