Your Experience Mod Is Your Workers’ Comp Identity

It is a fact that many employers actually overpay for their workers’ compensation premiums.  According to the latest reports, employers are paying around 20% more in surcharges than they need to. Most surcharges come from increases in the experience modification factor (mod).

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 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 hurts you more than the severity of losses.
• It is important 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 important factor insurers use to identify your risk.
• Your mod can be reduced through effective safety and loss control programs.

How to reduce your mod?

• Develop a safety program.
• Reward safety in the workplace.
• Start a return to work program.
• Complete regular safety inspections.
• 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.