The National Council on Compensation Insurance (NCCI) has released a new study, "Workers Compensation Excess Loss Development," which adds 4 calendar years of large loss experience to a similar 2007 paper.
Large loss and excess development is relevant to calculating excess loss factors used in retrospective rating. As part of its review of excess loss factors, NCCI looked at excess loss development nationwide as it relates to large deductible policies, state lump-sum settlement rules, and state excess loss factors (ELFs) at a $1-million limit.
NCCI notes that, as in the original study, this update reveals that patterns of excess loss development are sometimes the opposite of intuitive. Higher excess layers sometimes had lower development factors than lower excess layers; states allowing lump-sum settlement of medical benefits had higher excess development factors than states allowing only indemnity benefits to be settled in lump sums.
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