Delaware Business Insurance Update from CNC Insurance "Relief from Experience Mods?"

During the last 5 years or so, business owners have been getting hit with what seemed to be higher experience mods. The experience mod is the work comp calculation that is suppose to reflect the loss history of the company. The problem arises when the mod goes over 1.0. When this happens businesses have trouble with industrial and commercial vendors that require mods to be under 1.0 and they are penalized on the premium they pay. When the Delaware Comp Bureau reduced rates in 2008-2011 they also reduced the expected loss rates that are in the mod calculation. Some businesses went over 1.0 even though they had no claims, just because the reduced rates affected the math calculation.  During this time,  Delaware business owners work comp premiums went down. Unfortunately, now they are dealing with mods that are over 1.0. It goes to show that when it comes to business insurance you don't get something for nothing. Work comp rates were set to low to cover claims. This affected the experience mod which in a sense raises the premium back up. I call this the "insurance balloon", if you squeeze one end the other end goes up.  Now with the work comp rates going up 30 to 40% next year in Delaware, will the mods go down?  I am pretty sure they will as long as the expected loss rates go up commensurate. We will see how this all turns out. Until next time be careful out there and know your risks. K
blog by G. Kevin Nemith, President CNC Insurance Associates Inc., small business, business insurance, risk management, specialist serving Delaware, maryland, Pennsylvania, and New Jersey.
www.cncinsurance.com  www.bizinsurancetv.org  

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