NCCI modifier changes

Employers with poor loss histories will pay even more for their workers comp coverage starting next year as most states change the way premiums are calculated.But policyholders with proven risk management practices and safety programs that reduce workplace injuries will benefit from NCCI Holdings Inc.’s change in the methodology determining an individual employer’s experience modification factor, experts say.The Boca Raton, Fla.-based National Council on Compensation Insurance helps 38 states set their workers comp rates. The ex-mod changes begin with Jan. 1, 2013, policy purchases or renewals.It marks the first time in two decades that the rating organization has updated the “split point” used in its experience rating plan to more accurately reflect individual employer loss frequency and severity. An employer’s ex-mod factor has a significant affect on employer expenses because underwriters rely on them to adjust premiums with credits or debits (see related story).Every NCCI state has approved the split-point adjustment, said Peter Burton, NCCI’s senior division executive for state relations.NCCI’s change could have a “material” impact on individual employers’ premiums, said Pamela F. Ferrandino, casualty practice leader, placement for Willis North America Inc. in New York.“What we will see this do is really reward companies that have worked hard to improve and maintain their loss profile,” Ms. Ferrandino said. “Those risks that really have better-than-average experience benefit from being better than average.”But employers “with bad experience are going to see a higher apportionment of debits” added to their pricing, while those with a good loss history will see more credits, said Bill Carney, vp and chief underwriting officer at Accident Fund Holdings Inc. in Lansing, Mich.“So it really underscores the need for employers to invest in loss control, invest in safety, invest in their people and have a very strong return-to-work program,” Mr. Carney said.