WCIRB Issues Regulatory Filing for January 1, 2017, Including New Revisions to Ex-Mod
Thursday, July 14, 2016
CALPASC Director of Risk Management Bruce Wick has been working for 6 years to reform the Experience Modification System in California. The requirement is in statute, and therefore would take a significant legislative push to dislodge. Bruce has pushed to show how the Ex-Mod system can be unfairly used against contractors. A contractor may have a not at fault WC claim, or a potentially fraudulent claim, that is reserved on their unit stat filing. It hits the Ex-Mod, and that contractor may be bounced from bid lists due to a higher mod. Even if the Ex-Mod is eventually re-calculated, the contractor can't go back and re-bid the work.
Based on these efforts, the WCIRB made the regulatory change in 2015, to limit the impact of one claim of an otherwise loss free employer to a 25% increase in the Ex-Mod. The second phase of the changes kicks in on an employer's WC anniversary date in 2017.
The change is this: Currently, all employers losses have a single split point of $7,000. The amount of any single claim is charged fully up to the $7,000. Then a complicated formula uses a multiplier of any amount over $7,000 as a charge against the Ex-Mod, up to $175,000.
Under the new system, the split point will vary between $4,500 per claim for the smallest employer who qualifies for an Ex-Mod, up to $75,000 per claim for the very largest employers, moving at $500 increments. There will be no charge for the individual claim amounts in excess of the split point.
This should make the system less volatile from year to year. Most employers will see a minimal shift in Ex-Mod in the conversion to the new system. Employers who would likely see a decrease in Ex-Mod from the new system, are those who have low frequency of claims. Those who might see an increase, are those who have a higher frequency whose claims often rise to their split point amount.
The WCIRB is providing a self-calculator for those who want to compare their 2016 or their new 2017 Ex-Mod. You can click on the link below to try it. Your broker can also provide a comparison for you. Remember to adjust for your latest final audit payrolls, and newer loss runs.
CALPASC wants to keep a close eye on how this new system works out. Please contact Bruce Wick as you review how your 2017 Ex-Mod is looking: email@example.com or 909-793-9932.
The Ex-Mod system will never work completely fairly, but we hope this improves the performance from year to year.
CLICK HERE for the WCIRB link.