Correction of transposition
error leads to seven point drop in mod
Insured
Located halfway between San Francisco and Los Angeles, the 22-year-old company
reported sales in 2004 of $6.1 million and a payroll of $1,156,808. The
company’s 47 employees design, sell and lease trailers, modular buildings
and storage containers for mobile offices at construction sites, concession
stands, sales offices for developers, and alternative accommodations during
reconstruction.
Situation
A Certified WorkComp Advisor (CWCA) performed a detailed review of the company’s
Workers’ Compensation account and projected an Experience Modification
Factor of 0.90 for 2005- 06. When the worksheet came back from the Workers’
Compensation Insurance Rating Bureau (WCIRB), however, the insured’s
Mod had been set at 0.97.
Assessment
A thorough review of the 2005-06 Experience Modification worksheet from
the WCIRB revealed a discrepancy in the Bureau’s calculation of the
Mod. Upon further investigation, it was discovered that a data input clerk
at the Bureau had transposed the company’s Actual Incurred Loss of
$44,014 as $84,014. The $40,000 difference in the Actual Incurred Loss was
directly responsible for the 0.07 increase in the Mod.
Solution
The WCIRB was contacted and the transposition error revealed. The board
concurred with the discovery, corrected the entry and issued a revised worksheet.
Result
After correcting the transposition error, the WCIRB adjusted the company’s
Experience Modification Factor from its calculation of 0.97 to the correct
figure of 0.90, which had been arrived at in the CWCA’s original assessment.
The resulting drop in the Experience Modifier resulted in a premium cost
reduction of $8,851. |