split point

August 19, 2011

Big Changes Coming For Your Ex Mod Factor

NCCI has recently announced some news that will have an impact on how your NCCI experience modification factors are calculated. For the first time since 1993 NCCI will be adjusting the Spilt Point. Remember, the experience rating modification is affected by small losses more than by large ones because small losses are more frequent and predictable than large losses. The portions of all losses that are $5,000 (split point) or less, which are termed “primary losses”, have the greatest influence in determining the experience modification. Losses in excess of $5,000 go into the “excess losses”.     Every loss is divided into a primary and excess portion. Since small losses – those less than the split point – have NO excess value, primary losses work as an indicator of loss frequency. For example, three $3,000 losses yields $9,000 in primary and $0 in excess. Since large losses – those over the split point – always generate some excess value, they work as […]