What are the myths surrounding NYS Code 59? 

Over the years we have heard from many brokers and their clients that the experience modification is driven by claim frequency.  While that might be the case for some companies, it is not the case for most companies, unless your company has over 75 employees.  If you are a small to mid-size company, your experience modification, is most likely driven by one or two claims.

Also, specific to New York State, with the split point being raised over time from $5,000 to the current $15,000, small to mid-size companies have a greater likelihood of having their mod exceed the 1.20 threshold. It’s the one or two reaching or exceeding the $15,000 split point that causes the mod to go over 1.20.  This trend has been occurring for the last 10 years.

 Why is this important?

 Most business owners and executives know the direct cost of elevated experience modifications.  That is, standard premiums are adjusted using the experience modification to compensate for the higher incurred losses.  In the business environment, the increased cost becomes a competitive disadvantage.  More importantly, is how long those one or two claims impact the cost of coverage.  It takes four complete policy years for a claim to come in and move out of the calculation.  That’s a long time!

 Code Rule 59 does not address this, and it was not intended to address it.

 The State of New York promulgated the regulation to improve worker safety and health.  The experience modification is the basis for determining which companies aren’t safe enough.  The Code Rule 59 process is an assessment of a company’s efforts to provide a safe and healthful workplace.  This is very important, however, a safe and healthful workplace does not always translate into credit experience modifications.  This is especially the case with small and mid-size companies.

 Our business fully understands these nuances and is designed to not only assess your safety and health program, but to also assess your internal processes that impact the cost of claims.  Since the cost of claims drive the mod, you end up with free advice.  The outcome is compliance with the regulation, but equally as important, are the recommendations to reduce incurred losses.  With that, you are well on your way to improving your mod!

Corporations with headquarters outside New York State and Fortune 1,000 companies

 New York State has the unique Workers’ Compensation Industrial Code Rule 59 regulation.  It requires employers to hire a certified consultant to perform a safety program assessment when the experience modification exceeds 1.20 and there is at least $800,000 of payroll.  It is very important to understand that it is the New York only experience modification that triggers inclusion in the regulation.  It is not the NCCI modification.