Changes to the Workers Compensation formula effective January 1st, 2013 will now better reward insured’s with good claim experience and more severely punish those with poor loss experience. The changes effect the insured’s experience modification, which credits or debits an insured’s premium based on their claim history. Previously, the amount of each claim used to calculate the mod had been capped at $5,000. The change increases this cap to $10,000 in 2013, to $13,500 in 2014, and to $17,000 in 2015.
The result of this change is that those insured’s with high claims frequency and high claims amounts will now receive higher modification factors. This makes it all that much more important that employers institute programs that reduce both the frequency and severity of claims. Such programs include requiring regular physicals, safety plans, and back to work programs.