Check Loss Reserves at the Policy Five-Month Point
Your workers' compensation experience modification is calculated based on three years of experience (payrolls and losses). Your modification for 2009 is based upon payrolls and losses in 2005, 2006, and 2007.
The calculation is based on losses at, approximately, the halfway (six month) point in the policy.
Losses include what has been paid and any reserves on an open claim. (Recall that reserves are an amount the insurer expects to pay during the life of the claim.)
Insurance carriers report loss information to the rating authority, The National Council On Compensation Insurance (NCCI).
If you can reduce reserves prior to when loss valuations are reported, you can reduce the impact of the losses that go into your experience mod calculation. This reduces your mod and therefore, your premium.
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