Workers’ Comp Technical Correction Proposed

After reviewing its Experience Rating Plan, the National Council on Compensation Insurance (NCCI) is proposing to increase the claim amount at which losses are split into primary and excess amounts.

The current value of the split point, $5,000, was last updated 20 years ago and since then the average cost of a claim in Connecticut has tripled. That means the portion of each claim that goes into the experience rating formula at full value (the primary loss amount) is much smaller than what it was two decades ago.

And that has led to the experience rating plan being overbalanced to the all-risk (excess) average over time.

As a result, NCCI is proposing to increase the value of the split point to $15,000 by 2015, occurring in three annual steps:

• $10,000 effective Jan.1, 2013
• $13,500 effective Jan.1, 2014
• $15,000 effective Jan.1, 2015

NCCI, which is seeking regulatory approval for the proposal, says the average experience rating modification across all employers will not change because of these increases.

The impact on individual employers will vary according to how many claims they have that exceed $5,000. If none of their claims exceed $5,000, they will generally see a decrease in their experience rating modification.

If approved, the filing will become effective with each state’s loss cost (rate) filing, beginning in 2013.