After remaining virtually unchanged for two decades, the National Council on Compensation Insurance (NCCI) increased the experience mod split point from $5,000 to $10,000 effective 2013. The split point will increase to $13,500 in 2014 and will increase again to $15,000 in 2015.
Why the change? The average cost of a Workers’ Compensation claim has tripled in the last two decades. The old split point of $5,000 allowed for only a fraction of the actual claim’s primary value to be used in the experience mod formula. This results in less weight being given to an employer’s loss history, as well as experience rating modifications that are not as responsive as they should be to actual losses.
The change in the experience rating split point cannot begin without state regulatory approval. NCCI has filed the proposed change for regulatory approval in all states where its Plan applies. The change would become effective on each state’s filing effective date beginning with January 1, 2013 filings.
What is the Split Point? The split point delineates primary loss dollars from excess loss dollars for an individual loss. The experience mod is designed to be a predictive indicator of future injuries.
The split point change creates an opportunity for employers to take greater control over their workers' compensations costs. Contact your local independent insurance agent or your commercial lines underwriter if you have any questions about the new split point.
