Moore: Where Is Workers' Comp Pandemic Data?

Monday, August 22, 2022 | 0

Every few months, I try to stop and compile similarities in questions that we receive — (often now in person) for articles and to hone our workers' comp advice.

James Moore

Workers' comp does not really ever change that much. I attempt to change my outlook to produce non-boring articles and presentations. The workers' comp pandemic data delay seems to be a larger concern to employers, agents and consultants than I had thought.

Writing about the No. 1 question we receive over a few months’ time covers more ground for more people. Not long after the pandemic started, a few of the “expert pundits” were wanting the rating bureaus (National Council on Compensation Insurance, Workers' Compensation Insurance Rating Bureau of California, etc.) to publish preliminary data. The bureaus wisely did not publish anything early and speculative (good job!).

Early workers' comp pandemic data vs. X-mod structure

As many of us know, what happens in a workers' comp policy will not show up immediately in your experience modification. The freshest workers' comp data available is from 18 months ago.

Carriers are now reporting the data to the rating bureaus from 18 months ago. That wait time is called claims development. In case you want a quick review, one-minute and two-minute videos of how the experience period (the wait) works, can be found here.

Data has extra six-month delay beyond 18

Why? The data has to be checked by the rating bureau. Sometimes the bureaus bounce the data submission back to the carriers for corrections. The rating bureaus have been much more expedient in producing X-mods. When I first started tracking clients’ mods, receiving the mod one month before the policy start date was considered early.

The X-mod for a policy comes from two years in the past at a minimum. Many times, we receive emailed questions when employers are trying to match their loss run claims values to their experience mod sheets.

One main reason they do not match is the allocated loss adjustment expense figures are not in the mods. The other reason is the experience mod sheets are a reflection of the past, not the present. Like the new James Webb telescope, we are looking into the past, not the present, employer condition, including safety programs.

Caution: Plugging pandemic data into an algorithm

I usually do not recommend plugging the loss numbers into any algorithm, even the ones supplied by the rating bureaus. GIGO (garbage in, garbage out) comes from data science acronyms.

I used to debate with actuaries on this subject. Most actuaries want to do data smoothing and other techniques to have the most accurate information possible. I used to say, “The data is the data. How many data changes are really required?”

After seeing the results of plugging a loss run and payroll numbers into a spreadsheet or software to predict the effect of the workers' comp pandemic data, please be very careful.

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.