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Experience Mods: Learn the Rating Formula that Will Help You Save Big On Your Workers’ Comp Premium
Your Experience Mod Is Your Work Comp Identity
It is a fact that many employers actually overpay for their workers’ compensation premiums. Workers’ Compensation Coverage provides medical, disability or death benefits to any cast or crew member who becomes injured in the course of their employment. Coverage usually applies on a 24 hour per day basis whenever employees are on location away from their homes. Individuals who call themselves "Independent Contractors" will usually be held to be employees as far as Workers' Compensation is concerned, and failure to carry this insurance can result in having to pay any benefits required under the law plus penalty awards.
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 hurt 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 mandatory return to work program.
- Review claims with your claims handling administrator.
- Conduct pre-employment and post-accident random drug testing.
- Complete regular safety inspections.
- Be aware of tasks that seem to repeatedly cause injuries and change the nature of these tasks.
- Never use uninsured contractors.
- Consider joining a group program.
- Review your job classification to make sure all employees are properly 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.