Illinois companies with a history of workers compensation claims will be paying even more for workers comp insurance beginning next year, thanks to a new approach to calculating risks. Policyholders with a proven record of managing risks and maintain safety, meanwhile, will pay less.
The National Council on Compensation Insurance which helps 38 states including Illinois set their workers compensation rates is changing its methodology to favor companies with safe work records. (States like Minnesota and Texas have independent bureaus setting rates.) It’s called “experience modification factor,” and these ex-com changes go into effect Jan. 1, 2013.
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, writes Roberto Ceniceros in the Business Insurance blog at www.businessinsurance.com.
The best way to reduce injuries and therefore improve a safety record is to make investments in loss control, safety and educating employees, as well as implementing a strong return-to-work program.
The split-point change is needed because the average claim cost has increased threefold since the last update, rendering the current experience rating plan less sensitive to reflecting an individual employer’s risk experience, NCCI said.