A key to understanding your workers compensation premium is the experience modification factor, also known as your MOD or EMOD. Understanding your company’s MOD and the data used to obtain it helps you identify ways to minimize your workers compensation premium.
Who calculates the MOD factor?
Most states use the National Council on Compensation Insurance (NCCI) to collect data and calculate the experience modification factor. NCCI is a private corporation funded by member insurance companies. However, the following states have their own independent rating bureaus that are separate from the NCCI: California, Delaware, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania and Wisconsin. Texas is in the process of transferring from an independent bureau to the NCCI system.
How does my MOD affect my premiums?
The mod factor represents either a credit or debit that is 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.
How can you control your MOD?
Your mod factor has a direct impact on your workers compensation premium. The key to controlling your insurance costs is accident prevention.
- The mod is calculated based on data reported to the rating bureau by past insurers. Incorrect or incomplete data can cause incorrect mod factors. Review loss and payroll data to ensure the calculation is complete and accurate.
- Losses remain in the experience rating formula for three years. The experience modification factor is influenced more by small, frequent losses than by large, infrequent ones.
- Develop a sound safety program, return to work program and appropriate prevention procedures to reduce loss frequency.
- An effective self-inspection and accident investigation program are critical to managing claim frequency.
- Implement an active claims management program to manage outstanding reserves and focus on efficiently resolving open claims.
- Report all claims to your carrier immediately.
- Take an aggressive approach to providing light duty to all injured employees upon their release from treatment.
- Set safety performance goals for supervisory roles. Success in achieving safety goals should be used as one measure during performance appraisals.
- Train employees on their responsibilities for safety, and enforce violations.
- Frequently communicate with employees on a formal and informal basis regarding the importance of safety.
Conservation United can help reduce risk and save you money.
Establishing a proactive safety program is an effective way to reduce losses, positively impacting your mod and workers compensation premium. Contact us today at (844) 559-8336. We have the loss control experience to help you promote safety and control your workers compensation premium.