Workers Compensation Cost - How Much Money are you Leaving on the Table?
Workers Compensation Cost be it MOD, EMR, Ex-Mod…Call it what you want; this little number has a big impact on the amount of premium you are paying for Workers Compensation insurance. For many business owners, their Experience Modification Rating is a bit of a mystery but it needn’t be; understanding what your mod says about your company is the first step in controlling it and controlling how much premium you are leaving on the table. Let’s look at an example to help illustrate how your mod is either helping or hurting your business.
Mod Type Mod Value Premium
Current 1.11 $61,631
Your actual MOD and estimated premium.
Average 1.00 $55,523
The average MOD is always 1.00. This premium represents what the average competitor in your industry is paying.
Minimum 0.84 $46,639
The lowest MOD and premium you could achieve if you had zero losses in the experience rating period.
Controllable 0.27 $14,991
The MOD points and premium amount you could have saved if you had zero losses in the experience rating period. Compared to your average competitor, your company is at a: $6,108 disadvantage.
Your Experience Modification Rating is determined by a formula that takes into account your loss history for the three years prior to the most recent year. If you have more losses than is expected in your industry, or average, this results in a “debit modification” or a mod of over 1.00. If you are experiencing the same amount of losses as the average organization in your industry your mod will be a 1.00 BUT don’t get too excited, having a mod of 1.00 is like getting a “C” on your report card; you can do better for this to really hit home imagine that line delivered by your Mom. Lastly, if you have had fewer losses than is expected in your industry you will have a mod that is less than 1.00, or a “credit modification”. Every industry has a minimum mod, or what your mod would be with zero losses. In our example above, we can see that this company is leaving almost $15,000 on the table.
Understanding what your mod is and how its affecting your business is just the beginning. Your agent should be able to analyze your mod and show you what losses are hurting you the most and why; not all losses are give equal weight in determining your mod and your Workers Compensation Cost. If you are interested in seeing what is driving your experience modification rating call or email us at 877-352-2121 bkingsbury@clark-mortenson.com
