Experience Modification Factor: Reducing Workers Compensation Premiums
In most states, every workers compensation policy that generated average $5,000- $10,000 annual premium in the past 2 -3 policy periods will be issued a mandatory “experience modification
Experience modifications are a factor that modifies a company’s annual workers compensation premium based on your own experience, the factor can be a credit, such as .85, which is a 15% credit, or a debit, such as 1.15, which is a 15% surcharge. NCCI or individual State’s Workers Compensation Rating Board’s govern the experience modification rules and calculations. Each insurance company offering a policy within the State is required to apply the published experience modification factor assigned to its policy holder.
The experience used are generally based on 3 years of your experience, your audited payroll by class codes and claims for each year is the primary basis of your experience modification calculation. The claims are valued at a specific date and include the actual sum paid on closed claims and on estimates reserves on open claims.
The 3 year periods to be included in your experience modification are for the 3 years proceeding your last policy expiration, for example, if your policy effective date is 1/1/18, your experience period will include 1/1/16-17, 1/1/15-16, 1/1/14-15.
If your experience modification was calculated based on an open $100,000 reserve claim which ultimately closes with total payouts of only $50,000 your experience modification will not be adjusted, however, there are few complicated exceptions when an experience modification can be adjusted and recalculated, resulting in premium reduction/ credit.
Contact us now to find out if your company experience modification charge can be reduced contact our award winning nationwide Workers Compensation Insurance Audit service. Premium Paybacks WC Insurance Recovery 4722 18th Avenue Brooklyn, NY 11204 (718) 621-4300 premiumpaybacks.com firstname.lastname@example.org