Risk Management of Workers Compensation Understanding your experience

Risk Management of Workers Compensation Understanding your experience mod What is it? Why is it important?

Why is it Important? 1. 25 $187, 500 1. 0 $150, 000 . 75 112, 500 • Many times high mod factors force multiples of the premium increase • Not eligible for certain work • Uncompetitive • Direct versus Indirect Cost

National Council on Compensation Insurance • Founded in 1923 • Gathers industry loss and payroll data • Each year they analyze • 3. 1 million policies • 82 million medical data transactions • Detailed claim information on 211, 000 claims • Provides insurance rate and loss cost recommendations in 36 states • Promulgates individual company experience modification factors

What it is? • Expected versus Actual losses • Primary - Frequency • Excess – Severity • Calculated using 3 years data excluding the most recently completed policy period • Reports submitted by insurance carrier containing loss and payroll information • Class Codes

Modification Factor • • • Minimum mod Controllable mod Medical only claims Indemnity and return to work Multiple States

Payroll and Expected Loss Data

Loss Data

Mod Calculation Summary

Mod Impact on Premium

Loss Ratio Analysis

Contributions to Controllable Mod

Aggregate Loss Sensitivity

Loss Summary Report

Specific Loss Sensitivity

Roles and Responsibilities PRA -Loss Analysis -Risk Management -Loss Control / Training -Claims Management -Fraud Investigation Insured -Priority -Participation -Interactive -Review Data; Payrolls & Class Codes -Best Practices