NCCI Publishes Research Report on Excess Loss Development

Posted Date: October 11, 2011
    

Industry InformationResearch

Workers Compensation Excess Loss Development

Large loss and excess development is relevant to calculating excess loss factors used in retrospective rating. As part of this review of excess loss factors, NCCI investigates countrywide excess loss development.

We look at excess loss development in relation to:

  • Large deductible policies
  • State lump-sum settlement rules
  • State ELFs (excess loss factors) at a $1 million limit

The key findings are:

  • Claims over $5 million were more likely to develop down than up through 26 years of development. In contrast, claims of about $1 million to $2 million were more likely to develop up than down through 26 years.
  • Claims under large deductible policies had significantly more development in the excess layers than claims under other policies (ground up or small deductible policies).
  • States allowing medical lump-sum settlements had more development for high excess layers than states that do not allow medical lump-sum settlements.
  • No clear and credible differences in development were observed between the states relative to their ELFs at a $1 million limit.