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Correction of transposition error leads to seven point drop in mod

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.

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.

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.

The WCIRB was contacted and the transposition error revealed. The board concurred with the discovery, corrected the entry and issued a revised worksheet.

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.