5 Ways Organizations Can Improve Their Experience Mod Factor
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Workers’ compensation is all about the numbers – payrolls, rates, premiums and most importantly the Experience Modification Factor, or “mod” for short. The mod represents your company’s workers’ compensation claim experience in relation to other peers in your industry. The mod factor represents either a credit or debit that’s applied to your workers’ compensation premium. A mod factor greater than 1.0 is a debit mod, which means that your losses are worse than expected and a surcharge will be added to your premium. A mod factor less than 1.0 is a credit mod, which means losses are better than expected, resulting in a discounted premium.
Few insurance purchasers totally understand the importance of the mod and what impacts the calculation the most. So, how does a company improve their experience rating factor? Here are five ways:
1. Develop a robust employee screening process.
A large percentage (over 60%) of workers’ compensation incidents at not for profit organizations come from employees who have been with the organization for 3 years or less. In addition to your regular interviewing practices, you could include fit for duty (physical ability) tests and post-offer medical questionnaires. This allows you as the employer to gain a deeper insight to determine if the potential employee will be able to successfully complete the job requirements and duties without a high risk of injury. You would not pick an individual with poor math skills to be your accountant, and this same theory applies when looking at employees for jobs requiring physical abilities.
2. Develop a safety program with appropriate prevention procedures to reduce loss frequency.
Identification of hazards in the workplace and developing a plan on how to address these are the basic elements of a safety program. Every organization is different and there’s no one solution for all – so you must identify what works best for you and your employees.
3. Investigate accidents and identify ways to prevent similar future losses.
In addition to speaking to and documenting incident details with the injured employee, interview other witnesses or co-workers that could provide further incident details. An incident review team could also be established to review incidents. The purpose is not to punish an employee, but to learn as much as possible about the incident to prevent a similar reoccurrence.
4. Get your employees back to work and contact your injured workers early and often.
While this can be easier said than done, I can’t stress enough the importance of having a return to work program in place. Medical-only claims, or claims that don’t include indemnity lost wage payments, are discounted by a full 70% on your experience modification calculations. For example, if you have a $10,000 claim that’s medical only, only $3,000 of that claim will go into your rating calculation. After an employee injury, having a return to work program that can get your employee back to work with light duties will allow you to realize this benefit. It can also have the added effect of motivating employees to focus on their recovery, so they can get back to their normal job.
5. Set safety performance goals for supervisory roles.
Success in achieving safety goals should be used as one measure during performance appraisals. Frequently communicate with employees on a formal and informal basis regarding the importance of safety. Regardless of your job title, safety is everyone’s responsibility.
At Assurance, our brokers and safety consultants work with companies nationwide to improve their risk profile and reduce total cost of risk. Contact us for assistance today.
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