The National Council on Compensation Insurance (NCCI) is making alterations to its experience modification rating in 2024. These changes will affect each state differently and have the potential to increase your Workers Compensation premium and raise your e-mod, which could affect your ability to work for certain clients.
Changes started going into effect November 1, 2023 and will impact NCCI governed states, including but not limited to: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.
Instead of a uniform split point of $18,500 for all states, the plan will assign a higher split point value, like $25,000 to a state with above-average claim severity, while a state with below-average claim severity might have a split point value of $15,000.
Your split point is the specific dollar amount at which each Workers Compensation claim is divided into primary and excess losses, which are used to calculate your company’s annual E-Mod Rate (EMR).
Primary Losses are the expenses of each claim incurred below the split point. Primary losses have a dollar value weight of 100% against your e-mod calculation.
Excess Losses are the expenses of each claim incurred above the split point. Excess losses receive only partial weight on a sliding scale downward against your e-mod calculation.
If the split point stands at $18,500, a claim amounting to $50,000 would contribute $18,500 at 100% toward the primary losses calculation and $31,500 to the excess losses calculation on a sliding scale downward. Therefore, in the computation of the experience modification rating, primary losses carry more weight than excess losses.
Two specific changes being made:
A transition from a nationwide primary/excess split point to a state-specific split point.
A revision of the calculation of the state accident limitations.
The NCCI says these changes are being made to better reflect each state’s average claim costs and equitably account for primary and excess losses in states with substantial variations compared to the national average.
Workers Compensation premium impact on individual employers in states like Louisiana will be extensive as the split point increases to $38,000 from $18,500 beginning May 1, 2024. In addition, other states like Alabama will see a split point increase from $18,500 up to $23,500 beginning March 1, 2024.
To understand how the new split point changes will affect your ability to work for clients who require an e-mod calculation below 1.00 as well as the impact these changes will have on your Workers Compensation premium and EMR calculation - please contact Riley Winchester and Blake Martinez at Ross & Yerger. We will create and execute a plan that minimizes the impact these changes present to your bottom-line!
Ross & Yerger – one of the largest independent, privately-held insurance agencies in the Southeast – was established in 1860 and is headquartered in Jackson, MS. The firm has over 130 employees throughout their five offices in Jackson, Tupelo, Hattiesburg, New Orleans, and Memphis. Ross & Yerger is licensed in all 50 states and offers a full range of brokerage services, including insurance, employee benefits, bonds, financial services, and risk management consulting. For more about Ross & Yerger, visit www.rossandyerger.com.