Excess losses
Excess losses are the portion of a claim's cost above your state's split point, and they count at a reduced weight in your EMR (experience modification rate) calculation. Once a claim's cost crosses the split point, everything past that line is discounted rather than counted in full, which is why one very large claim generally has less impact on your mod than its total dollar value would suggest. This is also why one bad claim is a real, useful explanation to offer a GC or a surety agent: most of that claim's cost likely landed in the discounted excess category, and a single severe but well-managed incident often has less lasting effect on your mod than a pattern of smaller, frequent claims that stay entirely within the primary, fully weighted range. The distinction also matters in practice: explaining a one-time severe event is a different conversation than explaining an ongoing pattern of smaller claims.
See also
Source
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