EMR Changes – Split Point Change

The National Council on Compensation Insurance or NCCI is implementing a change to the way experience mods (EMR) for worker’s compensation are calculated. Before we get into the change, here is a quick crash course on EMR calculations. In the calculation,the frequency of claims provides more weight than severity. If you had 1 claim for $100,000, your EMR would be much lower than the same type of company with 100 claims equaling $100,000. The EMR calculation discounts severity by using a “split point” at $5,000, so any claim over $5,000 does not wreck your EMR. For more information on the “split point” and the EMR calculation: CLICK HERE.

The change involves the “split point”; it is moving from $5,000 to $10,000. What does this mean? According to NCCI Cicrular CIF-2011-14, this change will increase mods of many employers: 17.8% will increase .02 or more, 13.5% will increase .05 or more, and 7% will increase .10 or more. However, NCCI says that the overall impact will be “revenue neutral”, so some mods will increase but others will decrease for an overall neutral impact to work comp premiums.

More information on the change:

  • The change is effective 1/1/2013 for most states, but this differs from state to state.
  • This change has already been approved by the majority of NCCI states. It is still pending approval in Florida, Missouri and Massachusetts. Also, there are a few states that utilize NCCI for interstate rating, but have their own intrastate rating bureau (Indiana, Massachusetts and North Carolina). Of those states, Indiana and North Carolina have approved the change.
  • Independent states such as Minnesota, New York and Wisconsin have also approved the change.
  • The split change is not likely to affect the states Delaware, New Jersey, California, North Dakota, Wyoming, Washington, Ohio and Pennsylvania.