Work Comp experience mods, (E Mods) are considered to be a measure of safety for a business when compared to their peers. It is also a driver of insurance costs, as those with higher mods pay more than those with lower mods. In addition, many companies with mods over 1.0 find that they are no longer eligible to bid certain jobs or to work in certain facilities. High mods also make it more difficult for a business to get competitive insurance companies to write their work comp insurance. The need to risk manage E Mods is great.
So what are some ways to accomplish management of the E Mod? I have listed just a few below that can have have a big impact.
1) Know your "expected loss rate"- Expected loss rates are established by the State work comp bureau's for a 3 year window used to calculate your mod. Multiplying your 3 years of payroll against this rate gives you a loss number that is "expected". If your actual losses in the 3 year window are below this number, then generally your E Mod will be under 1.0. This gives you a metric to shoot for. Keep you actual losses under the expected number and you can realize savings on premium costs.
2) Build a safety culture at your business - Keeping your actual losses below your expected losses is not an easy tasks. On the job injuries do happen. The key is to build in safety to such an extent that work related injuries and claims are zero. It can be done. Many companies publish their success with "# of Days Without an Injury' announcements to help motivate their employees and to inform the public of their success. It also keeps their E Mods under 1.0 , This is an investment, and the return is lowered premium costs and costs of risk.
3) When injuries do occur, aggressively manage the claim- If you have an employee get injured on the job, quick reporting and treatment is vital to keeping the claim from getting out of hand. Be on the look out for doctors who misdiagnose the injury and who do not use evidence based medical treatments. Follow up on reserves that are set by the insurance company and make sure they are reduced or eliminated as the employee gets back to work.
4) Get the injured worker back to work as quick as possible- Studies have shown this is imperative to keeping claim costs down. Injured employees get better faster when they are motivated to come back to work. Employers that make it clear they want them back and who create interim jobs for them, have better success keeping E Mods under 1.0.
Keeping your E Mod below 1.0 is a must in todays insurance and business environment. Costs of insurance and the loss of future earnings ride on this number. Give it your full attention before it goes over 1.0.
Until next time be careful out there and know your risks.
Posted by: G. Kevin Nemith CIC. CRM President, Agency Leader for CNC Insurance & Pfister Insurance. Hilb Mid-Atlantic Group.
knemith@hilbgroup.com
Top 20 insurance brokers and risk managers in the USA.
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