As you’ve probably heard by now, NCCI is changing the primary-excess split point value in the experience rating formula beginning in 2013. I’ve been hearing from many agents and brokers who are wisely eager to understand this change and discuss it with their clients. We’ve already published several resources on this topic, and now we’re excited to announce that a new feature is available in ModMaster 5.0 to help you turn this change into an opportunity.
When you run a mod with a 2013 effective date, the calculation will not use the new split point unless 2013 rates for the applicable state(s) are published. Until then, you must use the Mod Projection feature in ModMaster to view the projected mod and/or print the 2013 Mod Projection Report. This functionality is also available for mods with 2012 effective dates.
First of all, how to find the 2013 Mod Projection feature and report
In the new ModMaster 5.0, this feature is found on the sidebar of the “Next Steps” screen. The link will only appear if your mod has an effective date on or after 1/1/2012. Once you click on the link, you’ll see on-screen a side-by-side comparison of the current mod summary values (the mod, expected losses, actual losses, etc.) with the estimated values for the 2013 projection. From there, you can request the “2013 Mod Projection Report” which repeats the on-screen summary and adds a graph and detailed information to help you fully analyze the estimated impact of the new split point value on individual losses.
When you should use this feature
I recommend you take at least a quick look at this screen for every 2012 and 2013 mod. Remember, according to NCCI data discussed further in this article, 36% of mods will see a shift of only plus or minus 2 points; another 38% will see a mod decrease from 2 to 5 points. Another 4% should expect to see an increase of 2 to 5 points. If your clients represent a typical distribution of industries and risks, 22% of them are likely to see what I see as a significant shift in their mod – that is, a mod that increases or decreases 5 points or more.
Based on the data and the client’s industry, I would then decide whether to print, analyze and discuss the 2013 projection with the client:
- For some clients, a mod change of a few points may not be something you want to discuss at length. But in some industries, such as construction, an increase of only a point or two can be significant if it eliminates a company’s eligibility to bid on work.
- For any client who is estimated to experience a significant increase in the mod, this is an opportunity to prepare them for possible bad news and to help them explore and recommit to the most appropriate loss control practices for their situation.
- For any client who is estimated to experience a significant decrease in the mod, this is an opportunity to share some good news, but remember…
The split point change produces one opportunity that applies to nearly all clients
As a result of the split point change, the minimum mod, or loss-free rating, in most cases will be dropping several points. This in turn will often drive up the controllable mod, thus producing a great opportunity for you to share your expertise, discuss loss control, and deliver recommended Broker Briefcase resources on safety, injury management, and more that are part of ModMaster 5.0.
Remember, the 2013 Mod Projection Report is an estimate
I want to emphasize that this feature is providing an ESTIMATE of the 2013 mod. This estimate uses the new split point (changed from $5,000 to $10,000) and an associated change to the discount ratios which NCCI estimates will be 50% higher. For these purposes, we are also assuming that the change will take effect for all states and the independent bureaus which use NCCI or similar rating methodology (excluding California), but a few states have yet to indicate their plans for this change.
As always, feel free to comment here or to email me at [email protected] with any questions.
– Kory Wells, WorkCompEdge Blog Editor
Last updated 6/12/2012
© 2011-2012 Zywave, Inc. All rights reserved. For reprint permission, contact the blog editor.
Login required for the following two resources:
- AgencyFuel article: A new way to sell with the mod.
- Broker Briefcase document “Work Comp Insights: NCCI Changes Primary-Excess Split Point for 2013.” Ideal for ModMaster users to share with clients and prospects.
All ModMaster users should have an AgencyFuel login – if you don’t, contact the Zywave Partner Service Center at [email protected] or 866.499.9283.