Recently, I had come across some work from two so called Workers Comp "experts" that had guaranteed the accuracy of their E-Mod/X-Mod predictions for their client employers. I had thought this was interesting and decided to examine their predictions further.

The one obvious error in calculating the E-Mods/X-Mods for the next year is that these were magically performed at the end of the prior policy year. This will just not work. There is a date called the Unistat date that is the deadline for the reserves on the applicable files to be applied to the E-Mod/X-Mod calculations. The Unistat date is usually 6 months after the expiration of the last policy. To be entirely accurate, a consultant could as of today accurately calculate the future E-Mod/X-Mod for a policy that expired 5/1/09 to be applied to a policy that started on 5/1/10.

Why is the system set up that way? The six month delay is to enable the Workers Compensation adjusters to have time to assess accurate reserves on the files. The usually means to increase the files - rarely does it reflect many reductions. I am not for or against the Workers Comp Experience Rating System. It is the system we have in place.