Experience Modification

Experience ModificationWorkers compensation experience modification is complicated. We can help.

The premiums that a business pays for workers’ compensation insurance are impacted by its experience modifier. Developed by the National Council on Compensation Insurance (NCCI), or state workers compensation authorities, this modifier is based on the individual loss experience for a business and accounts for the number o f employee claims over the past three years (excluding the current period). Companies that do a better job of controlling their losses than other similar businesses in their classification will have experience modifiers lower than 1.0. In developing an experience modification factor for a specific company, NCCI places greater emphasis on the frequency of accidents rather than on the cost of these accidents. This approach is based on the premise that accident frequency breeds severity, and that chance alone often determines how costly an accident will be.

Auditing Your Modification Value

Information necessary to compute your Modification Factor is supplied to the NCCI or state rating bureau by your insurance carrier on a document called the “Unit Statistical Card”.
Comprehensive audits of a firm’s modification calculations have shown that errors frequently occur on the Unit Statistical Card.

Lapointe insurance provides the following results through a modification review audit:

I. Identification and isolation of losses negatively affecting Experience Modification Ratings

II. Reviews experience rating for errors

III. Arranges for Modification to be corrected and refunds issued

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