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.
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!
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.
Your experience modification rating, or mod, is one of the most significant drivers of your Worker’s Compensation premium. If you want to lower your annual Worker’s Compensation cost, three factors come into play:
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.
Worker’s 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 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?
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 Worker’s 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.
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 feel that if you want to lower your worker’s compensation premium, then you should be able to!
We believe that if we can help you now, 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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