Your Experience Mod Is Your Work Comp Identity
It is a fact that many employers overpay for their workers’ compensation premiums. One of the reasons is that their experience modifier is not accurate. The experience modifier is a numeric representation of your company’s loss history compared to the average for your industry. If your loss history is average, your modifier should be 1.00. The experience mod is a factor unique to each employer. In simple terms, this formula is designed to compare a specific employer’s historical claim, employee classifications, and payroll data, to other employers with similar business operations. An individual employer’s experience mod is calculated using claims data compared to premiums from the three most recently completed years, excluding the expiring term.
Key points to consider
- If your losses are increasing, your mod most likely will go up even if your payroll goes down.
- The frequency of losses hurt you more than the severity of losses.
- It is essential to check the calculations on the experience modification worksheet each year.
- The most common errors are incorrect or incomplete payroll data.
- Your workers’ compensation mod is the single most crucial factor insurers use to identify your risk.
- Your experience mod can be reduced through effective safety and loss control programs.
A review of your experience mod by our agency can identify errors in many different areas.
- Errors in employee classifications. If employees are misclassified, it could lead to increased costs.
- Review of claim reports uncovering errors.
- Payroll report should also be reviewed for accuracy. Survey closed claims to ensure they are accurate.
- Analyze claims reserves to determine if they are consistent with industry standards.
Once you have completed this analysis, it can be beneficial to:
- Determine claims trends are they trending up or down?
- Should any claims be disputed?
- Are all calculation completed correctly?
- What can be done to help reduce the modification factor?
How to reduce your mod?
- Develop a safety program.
- Reward safety in the workplace.
- Start a return to work program.
- Complete regular safety inspections.
- Never use uninsured contractors.
- Consider joining a group program.
- Review your job classification to make sure all employees are correctly classified.
- Investigate every accident and make corrective actions if needed.
- If you suspect fraud, immediately inform the insurance company.
- A disciplinary program also should be incorporated into the safety program; it should hold employees accountable for breaking the rules.
Partners Risk Services represents a carefully selected group of financially strong, reputable insurance companies, therefore, we are able to offer you the best coverage at the most competitive price.