Workers Comp Term Of the Day - Excess Losses

In the Experience Modification Factor formula, Excess Loss is the amount of any single claim that is more than the cut-off point for inclusion as a primary loss. The NCCI experience rating formula uses the threshold of $5,000. The threshold varies in the formulas used by by other rating bureaus.

The Excess Loss (beyond $5,000) is usually discounted by a factor to reduce its impact so as to not penalize an insured for a few large losses versus numerous losses over the same time period.