NCCI Changes Experience Modification Rating Plan Starting 2013
The National Council on Compensation Insurance (NCCI), the entity responsible for calculating the Experience Modification Rating (EMR) for most states, has announced changes to their Experience Modification Rating formula. The planned changes will take effect January 1, 2013, with additional changes to be phased in over a three year period.
NCCI’s Experience Modification Rating consists of two primary elements: Frequency or Primary Losses and Severity or Secondary Losses, referred to as Excess Losses on the NCCI Mod Worksheet. Today, these two components are based upon the following criteria:
- Frequency or Primary Losses: Claims under $5,000
- Severity or Secondary Losses: Claims over $5,000
Frequency of claims (primary losses) tends to have a greater impact on the EMR than severity of claims (secondary losses). These thresholds, or split points, have not changed in over 20 years. Due to inflation, NCCI is updating the thresholds for determining frequency vs. severity. The schedule for these changes is outlined below:
- Frequency or Primary Losses : Claim less than $10,000
- Severity or Secondary Losses : Claim greater than $10,000
- Frequency or Primary Losses : Claim less than $13,500
- Severity or Secondary Losses : Claim greater than $13,500
- Frequency or Primary Losses : Claim less than $15,000
- Severity or Secondary Losses : Claim greater than $15,000
If you have additional questions, your company’s Workers’ Compensation Insurance provider will be able to provide more details as to how these changes will affect your company.
Additional Information and Resources: