Experience Modification. You Need To Know This.
First, you need to know what an Experience Modification (Ex-Mod or MOD) is. Your Ex-Mod is a factor applied to your Worker’s Compensation calculation that affects your premium. Anything under 1.0 lowers your costs—anything over 1.0 increases. Without getting into the actual calculation, just know that fewer claims payouts mean a lower MOD.
Translation: This is a number that can cost you or save you big dollars on your worker’s compensation premium.
9 Ways To Lower Your Mod
So what can you do if you’re considered an adverse risk? How can you keep your mod under control? What effect will it have? Even if you’re “average,” or slightly below the norm, there are still considerable savings to be had by making safety a TOP priority.
Below are a few tips to help you get on the right path to being a top-tier risk to an insurance carrier!
- Develop a formal written safety program. Continually train and evaluate employees in their responsibility for safety, both for themselves and those around them. In more extreme cases, incorporate a disciplinary policy into the program that holds employees accountable for breaking company safety rules and rewards them for adhering to the plan.
- Communicate frequently with the employees, keeping safety at the forefront of their minds. Weekly safety meetings are an excellent way to achieve this.
- Work with supervisors and team leads to set safety performance goals. Success in achieving safety goals should be a focus during performance evaluations. Safety and compliance start at the top. It takes a “buy-in” from all supervisors and management.
- Evaluate accident history and near-misses at least monthly. Look for common trends/occurrences and take corrective action, starting with the worst problems first.
- Take corrective measures to eliminate hazards. Investigate all accidents immediately and thoroughly, and be aware of fraud. If you want to get a more accurate view of your business, investigate “near” accidents. If there is a series of “near” accidents, those may need to be addressed sooner rather than later.
- Report all claims to your agent/carrier immediately. If you suspect fraud or suspect claims, let your agent know. Frequently monitor each claim’s status and work with the adjuster to resolve any issues as they arise promptly.
- Develop a return to work program, including an aggressive approach to providing light duty to all injured employees upon their release from treatment. Work with the supervisors to ensure the light-duty employees are conforming to the restrictions.
- Work with your carrier. In more severe cases involving lost time, please communicate with the adjuster continually to demonstrate your desire to work with the injured employee, helping them back towards gainful employment.
- Celebrate the success of being a SAFE Workplace. Set short and long term goals, with visible aids that encourage participation from your employees. Challenge the workforce to go 31 days without a loss. Too easy? 120 Days. 365 Days. The next thing you know, your workplace is much safer, employee morale is improved, AND… You’re saving money!
The ultimate goal is to lower the frequency and severity of the accidents that happen at your business. It’s not going to happen overnight, but by taking small steps, you CAN make a difference.
If you want to get more in-depth or need additional resources to establish a formal safety plan, please contact us!
Speak To Our Agency President regarding Your Mod by clicking here.
Understanding Your Experience Mod
Your experience modification rating, or mod, is one of the most significant drivers of your Workers Compensation premium. If you want to lower your annual Workers Compensation cost, three factors come into play:
- Your industry classification code(s), which will determine the rate
- The payroll associated with each classification code
- The Experience Modification Rating (EMR)
NCCI or the National Council on Compensation Insurance determines your industry classification codes. NCCI data analyzes industry trends and provides objective insurance cost recommendations to insurance carriers across the nation. Ensuring that your industry “class code” is accurate will ensure that you’re paying the appropriate rate for the exposures you face.
Workers Compensation is an auditable policy. At the end of each year, the carrier will work with you to ensure that the estimated payrolls used during the policy period were accurate. If you find yourself owing the insurance carrier at the end of each year, your policy likely needs to be updated, reflecting the increased payroll amounts throughout the year.
The experience modification rating reflects your company’s loss history compared to similar businesses in your industry. It can have a STRONG impact on your insurance premiums for both positive and negative. Again, the industry average is 1.0. Anything below 1.0 is considered an excellent risk. Anything above 1.0 is regarded as an adverse risk. Do you know where you fall on the spectrum?
Class Codes Matter
Has your business changed through the years? If so, there’s a possibility that you have been misclassified. Different class codes come with different rates, ensuring each employee is assigned to the right category can dictate whether or not you’re paying the correct premiums.
Once your class codes are correct, each class code matches the corresponding annual payroll for that type of labor. This is how your insurance carrier initially calculates your premium.
Because the state government regulates workers Compensation, special rules apply to Work Comp that don’t apply to other types of insurance. In some cases, we see that businesses have been “classed” incorrectly. In Kentucky, we can go back three years and require the insurance carrier to repay the overpaid premiums. But be careful, that same law applies in reverse.
The Real Good Group Difference
Did this information help? This is how we treat each prospective client. Our first desire is to earn your trust. So we give freely of information that you can use anywhere. Most agencies would require you to be a client to help you in this way.
We believe that if we can help you now, that someday we may be able to earn your business. And for us, that is enough.
Whether or not the Real Good Group represents your business insurance, we’re here to give you helpful, honest, and open-handed. Give us a call today at 859.203.5353.
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