Workers’ Compensation Insurance – Glossary of Terms: E – I

EAP: Employee Assistance Program

EEO: Equal Employment Opportunity

EH&S: Environmental Health & Safety

Emergency Medical Condition: A medical condition manifesting itself by an acute symptom of sufficient severity, including severe pain, such that the absence of immediate medical attention could reasonably be expected to result in placing the health of the individual in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of any bodily organ or part.

Employers’ Liability: Section B of the standard Workers’ Compensation insurance policy, this is the part of the policy that has a dollar limit shown for the coverage. This section insures employers for liability towards employees that is not covered by the statutory Workers’ Compensation provisions of the state (which are insured in Section A and have no set dollar limit on the policy).

EPD: Employee-Paid Disability

Endorsement: A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Modifications to coverage during the policy period are “endorsed” on to the existing policy.

Ergonomics: The science of fitting work or workplace to the human body, to help avoid injury or illness due to occupational stressors.

Excess Losses: In the Experience Modification Factor, this is the amount of any single claim that exceeds the cut-off point for inclusion as a primary loss. In the NCCI experience rating formula, this threshold is $5,000. In the formulas used by by other rating bureaus, the threshold varies.

Exclusion: A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations. In some states owners/officers can be “Exempt” from workers’ compensation. An acceptance of the exclusion may be required or other form of documentation.

Expected Loss Ratio (ELR): In the Experience Modification Factor, ELR is a percentage factor applied to an employer’s past audited payroll to calculated what the expected losses should be for a company of the same type and size as the employer.

Expense Ratio: Percentage of each premium dollar that goes to insurers’ expenses including overhead, marketing, and commissions.

Experience Modification Factor: An adjustment to Manual Premium, calculated by an advisory organization (also known as rating bureaus) such as NCCI, based on historic loss and payroll data of a particular insured. Also called Experience Modifier, or Experience Mod.

Experience Period: The window of time from which loss and payroll data is used to calculate an experience modification factor for an employer. Normally this window is a three year period, starting four years prior to the effective date of the experience modifier. However, rating bureaus do not wait until three full years of data are in the experience period before producing an experience rating for an employer. If an employer reaches a certain, relatively low threshold of workers’ compensation insurance premiums in any one of the three years in the experience period “window”, this will make that employer eligible for experience rating.

Extended Sick Leave – ESL: A University benefit that provides the injured employee with up to 26 weeks of 80% salary after sick leave credits are exhausted. The department pays the difference between temporary disability rate and the 80% salary.

FEHA: Fair Employment and Housing Act

FMLA: Family Medical Leave Act

Governing Classification: The classification code on an employer’s workers’ compensation insurance policy that generates the most payroll aside from standard exception classifications such as clerical or outside sales (unless there is no other workplace classification applicable other than a standard exception).

Guaranteed Cost: A Workers’ Compensation insurance policy that is not subject to adjustment due to losses that occur during the policy term. In a guaranteed cost policy, the only variable affecting premium that should change between policy inception and audit is payroll.

Incurred Losses: Paid losses plus loss reserves for estimated future claims costs. Many loss sensitive insurance policies adjust premium based on incurred losses rather than just on paid losses.

Indemnity Claim: A claim that includes not just medical payments but also payments for lost time by the injured worker. These tend to be more expensive than medical-only claims.

Insurance Pool: A group of insurance companies that pool assets, enabling them to provide an amount of insurance substantially more than can be provided by individual companies to ensure large risks such as nuclear power stations. Pools may be formed voluntarily or mandated by the state to cover risks that can’t obtain coverage in the voluntary market such as coastal properties subject to hurricanes.

Interstate Rating: An experience modification factor that applies across more than one state. Interstate ratings are calculated by NCCI for employers whose past workers compensation insurance policies show payroll in more than one state. Most, but not all states, participate in the interstate rating system. A few states, such as Michigan, Pennsylvania, and Delaware, do not participate in interstate rating, but instead continue to calculate separate experience ratings for employers who operate in their jurisdictions, even if those employers also qualify for interstate rating. Those employers thus have one experience modifier applying to their operations in most states but a separate modifier calculated by the stand-alone state rating bureau. The separate stand-alone mod would apply only to workers compensation insurance premiums developed for the employer’s operations in that stand-alone state.