Losses are just one cog in the wheel of a company’s overall Workers’ compensation costs- another is the premium. Many calculations are involved in setting the premium. It comes down to how much of a risk the insurance carrier thinks it is taking by offering insurance to your business. One of the most significant parts of the premium calculation is the experience modification, or ex mod, which is a perception of risk.
The ex mod workers’ compensation factor can add up to a significant financial sum if it is not managed correctly. Fortunately for businesses, having a basic understanding of this can end up reducing workers’ compensation premiums.
Here are some ways you can reduce your workers’ compensation experience modification rate.
What is Your Experience Mod?
First things first, let’s start with the basics. A simple definition of your experience modification rate, or EMR, is payroll divided by claims. Each day, a company’s employees perform work that carries a certain amount of risk to their wellbeing. The stronger the safety measures in place, the less likely it is for an employee to injure themselves. Fewer injuries mean lower modification rates, as more injuries mean higher experience modification rates.
How to Find Your Experience Mod Rate
The NCCI, or National Council on Compensation Insurance, is a group that calculates Experience Modification Rates for companies in the U.S. Some states have their rating systems in place due to size and complexity, such as New York and New Jersey.
When a company has a high ex mod rate, many reasons can contribute to it. The most significant factor is the number of open claims a company currently has. If a business has a high number of claims, or one large claim on their workers’ compensation policy, its EMR may stay high until those claims are closed.
Most companies will see another increase in their Experience Modification Factor following their next recalculation if they had numerous claims open. If left unchecked, a company could face higher premium rates, possible penalties, and violations from the U.S. Labor Department.
How Can You Reduce Your Ex Mod Workers Compensation Rate?
There are many ways a company can reduce its ex mod rate. By utilizing simple steps and measures, the rate can drop significantly. Here are some steps to take:
- Track incidents: Most claims can be avoided if a business is meticulous about tracking all of the factors that lead up to an incident. Most claims could have been avoided in hindsight as the employee typically cut corners before the injury occurred.
- Investigate immediately: Companies should take corrective action to eliminate the situation at hand as quickly as possible. If fraud has taken place, a company needs to investigate aggressively.
- Report everything to your broker: The longer it takes to report a claim, the more expensive it will be.
- Have an action plan: Every reported claim to your insurance carrier should have a detailed action plan to close the claim. This action plan is something that most businesses usually falter on. Companies may report a claim then forget it until the policy comes up for renewal.
- Involve lost time: In more severe situations, lost time should be accounted for. Companies need to communicate with the claims adjuster to demonstrate their interest in returning the injured employee back to work.
- Set safety performance goals: Success in achieving safety goals should be used as a measure during performance reviews.
- Develop a written program: A written safety program can help inform employees of the risks they face and can end up lowering your overall ex mod rate. OSHA rules dictate that every facility location must hold people accountable for breaking the written safety program’s rules.
- Frequent communication: Safety rules and regulations should be communicated regularly with employees, both formally and informally.
About InsureMyWorkComp & Their Workers Comp Solutions
InsureMyWorkComp is a digital brokerage that helps clients find the right workers’ compensation solution for their business needs, such as occupational accident insurance. Unlike other online platforms, we will help you to work with an agent who can provide you the right solution for your risk profile. Our staff has over 50 years of workers’ compensation underwriting and sales experience, and we are confident that we will provide you the support that you need. For more information or to get a quote, contact us today at (855) 340-9138.