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Moore: Why Don't Loss Run Numbers Match X-Mod Sheets?

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One of the most frequent questions that we have received over the years is why the workers’ comp loss run numbers never match the info on the experience modification sheets. Let's look at three reasons why this happens during a loss run review.

James Moore

James Moore

I was performing a loss run review for an agent-client that caused me to write this article. Matching up the loss run to the mod sheets was quite a task, as all three of the following instances occurred with the review.

Loss run numbers are current;
rating bureau mod sheets are not

If you have online access to your claims or can download the loss run numbers on demand, the information you have is very current.

If you do not have online access to your claims, ask your carrier or agent for a user name and password for access. Many articles covering online access advantages are covered on this website, such as this one.

Experience mod sheets are dependent upon the insurance carriers’ data reporting departments supplying timely information to the rate bureau (National Council on Compensation Insurance, Workers' Compensation Insurance Rating Bureau and others).

The experience rating period delays the reporting of the loss run numbers an extra six months. This allows claims development for an extra six months.

Allocated expenses do not count on mod sheets

Allocated expenses (ALAE) are the third set of numbers that you will see in the loss run. ALAE means the carrier’s cost of handling the claim, such as defense attorney or medical bill processing fees. The rating bureaus decided long ago that ALAE should not figure into the X-mod.

On some losses, ALAE can be as large as the indemnity or medical columns on the loss runs. I reviewed one over the weekend that had more than $30,000 in ALAE. The indemnity and medical totaled $28,000. This occurs more now than in the past due to the severity of claims increasing every year.

Carriers may use partial or different claim numbers

Some claim numbers may be a little different when comparing the workers' comp loss runs. Claim numbers can be up to 40 characters long. Rate bureaus vary on the length allowed for claim numbers. From what I have seen, the claim numbers are truncated at 20-25 characters.

Loss run reviews can take time to accomplish if you decide to compare them to the X-mod sheets. Don't rush the comparison.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

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