Tag Archives: Experience Mod

An experience mod is a score adjusted by the insureds claims and account with the insurer.

Claims Management, Construction Practice Group Content, Food & Beverage Practice Group Content, General Liability Insurance, Human Services Practice Group Content, Line of Insurance, Risk Management, Transportation Practice Group Content, Workers Compensation Insurance, Workers Compensation Premium Audits

What A High Experience Mod Means and How It Can Affect You

You’ve just seen your Experience Modification Rating (EMR) and it is high again. Or your worst-case scenario, it has gone up again. Year over year, you’ve spent time shopping for your insurance due to your high EMR. It is time to stop shopping and start proactively working to lowering your EMR because eventually, it will catch up to you.

What Is Your Experience Mod?

Let’s start with a basic definition. What is your Experience Modification Rating or your EMR? A simple definition of EMR is Payroll divided by Claims. The video below explains what your experience mod is and what is expected of your organization. (If the video does not play in your browser click here.)

Remember, an average experience mod is a 1.0, this is like receiving a “C” on your report card. If you’re happy with this, stop reading now. Good luck, you’ll be competing against companies with a greater competitive advantage than you because they’ll have a much lower cost structure, higher profits, and a larger business development budget.  

Some Construction companies bidding on government work are ineligible if their EMR is above 1.0. 

How To Find Your Experience Mod Rate

The NCCI (National Council on Compensation Insurance), is a group that calculates Experience Modification Factors for companies across the entire United States. Some states have their own rating bureaus due to their size and complexity. For example, New York and New Jersey have the NYCIRB & NJCRIB respectively. For a detailed explanation of what your Experience Modification Factor is and how it’s calculated visit this site. 

Why is Your Experience Mod High?

There are a number of reasons why your EMR is high. The biggest factor is the number of open claims. If your organization has a high number of claims or one large claim on your Workers’ Comp policy your EMR may stay high until that claim is closed.

How This Affects Your Organization

What this means is that most companies will see another increase in their Experience Modification Factor following their next recalculation. That takes place on their “Unit Stat Date,” and, if left unchecked, your business could face higher rates, possible penalties, and Labor Department Violations.

What You Can Do To Lower Your Experience Mod:

  1. Track incidents (near misses) not just claims. Most claims can be avoided if you are meticulous about tracking all of the near misses that lead up to the eventual incident. Most claims could have been avoided in hindsight as the employee typically was taking shortcuts long before the ultimate injury occurred. Track these infractions and you will prevent at least one injury a year.

    High Experience Mod

  2. Investigate accidents immediately and thoroughly; take corrective action to eliminate the hazard. If you sense fraud, get aggressive; don’t be an easy target. We suggest Why Analysis follow all incidents. That’s a whole other article that can be accessed HERE.
  3. Report all incidents to your insurance broker or Risk Advisor immediately. Studies show the longer it takes to report a claim, the more expensive it will be. A 4-week delay in reporting an injury drives the cost of that same injury by 48% according to a Hartford Insurance study of over 2 million claims.
  4. Alert your workers’ compensation claims adjuster to any serious, potentially serious or suspect claims. Frequently monitor the status of the claim, and communicate with the adjuster to resolve them as quickly as possible. Too busy to do that,  have our Claims Advocates communicate with the adjuster on your behalf. Our Claims Advocates were insurance adjusters so they speak that language holding the carrier’s adjusters accountable.
  5. Every reported claim to your insurance carrier no matter the line of insurance should have an action plan attached to it to close out the claim. This is a big mistake most businesses make. They report it and then forget it until the policy comes up for renewal. At that point, they are shocked at the increase in the workers’ compensation insurance premium which is always driven by claims experience. Folks forget that workers’ compensation insurance is really a very expensive credit line to the business.
  6. Take an aggressive approach to providing light-duty or transitional to all injured employees upon their release from treatment. Return To Work programs are extremely powerful tools for lowering the cost of a workers’ compensation claim as they give leverage back to the employer, stopping the tail from wagging the dog.  Supervise light duty employees to ensure their conformance with restrictions.
  7. In serious cases that involve lost time, communicate with the claims adjuster to demonstrate your interest in returning the injured employee back to gainful employment.
  8. Set safety performance goals for those with supervisory responsibility. Success in achieving safety goals should be used as one measure during performance appraisals. At Metropolitan Risk this is just one of the K.R.I’s (Key Risk Indicators) we emphasize to establish internal standards and accountability.
  9. Develop a written safety program, and train employees in their responsibilities for safety. OSHA rules dictate for every facility location or job site there must be a competent person. Incorporate a disciplinary policy into the program that holds employees accountable for breaking rules or rewards them for correctly following safety procedures. This should be tied into the employee handbook which each employee receives when they are on-boarded for your org.
  10. Frequently communicate with employees, both formally and informally, regarding the importance of safety keeping safety top of mind at all times.
  11. Make safety a priority – senior management must be visible in the safety effort and must support the initiative.
  12. Evaluate accident history and near-misses at least monthly. Look for trends in experience, and take corrective action on the worst problems first.
  13. Ensure your payroll and class codes are accurate. Over 65 % of workers’ compensation audits have errors. See COMP CHECK .
  14. Ensure the correctness of your mod calculation. Far too often there are errors here as well. See COMP CHECK

You can build all this out organically by yourself OR speak to a Risk Advisor about our COMP CARE PLATFORM. We have this all built. It’s turn-key and ready to be deployed in your organization if you are serious about reducing your workers’ compensation costs. There are no short cuts…

How Metropolitan Risk Can Help

Still looking for more info? Still have question? We have a team of Risk Management specialists who are here to help! Contact a Risk Advisor today for more information on how you can work towards lower workers comp costs by closing claims instead of shopping for insurance.  Click here to book a 5-minute call with a Risk Advisor

Construction Practice Group Content, OSHA, Risk Management

What Does It Mean to Be a Competent Person According to OSHA?

What does it mean to be a competent person according to OSHA? Are your workers competent? The general idea of competency is defined as having the required ability, skill and knowledge to do something. There are countless employers who state they have competent employees or are competent themselves. Yet, the term ‘competent’ may not equate to experience or the ability to make altering decisions on the job site.  The ambiguity behind the term has been misunderstood and defined at various standards.

According to OSHA, the term extends beyond acknowledging someone with the title. OSHA construction standards define this term as an employee who can perceive hazards within a given task and also has the ability to ease those issues. Phil Colleran, a safety consultant specializing in construction and a former OSHA compliance officer states “it’s a fairly misunderstood term.” Still, contrary to common belief, formal training and attending classes is not a prerequisite to being competent.

Why Is This Important? 

Should you be lucky enough to have your site audited by an OSHA inspector the first question they will ask is “Who is the competent person on this site?” If you have not delegated before to this audit, a designated “competent person” that will be your first of many fines.

The Implications and Applications of Insights

A competent employee is more likely to assess and properly mitigate emerging hazards. An employee that could not do this would not be considered competent. There is also an immense difference between understanding a broad spectrum of scenarios and having a hands-on situational approach experience. The individuals use their skills and capability to identify hazards associated with clear operations. Simply put, competency is not exclusively knowledge but the application of it. 

The Appropriate Person

A large worksite may ask for several competent individuals who are proficient in their own areas of expertise. However, why not have someone that is specialized in multiple areas? One having deep knowledge and experience in all fields is unlikely. Even if one has the experience encompassing all aspects of the worksite, an employee who specializes in one area is able to properly assess, diagnose and take the necessary steps to handle a diverse array of situations. 

 

Still, utilizing employees who are competent is key to decreasing errors and recognizing hazards. Speak with one of our highly experienced and competent Risk Advisors today!

 

 

 

Claims Management, Construction Practice Group Content, Workers Compensation Insurance, Workers Compensation Premium Audits

Why You Need Claims Management on OCIP Workers Compensation Claims

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CCIP or OCIP Workers Compensation claims can cost you a lot.

Contractor Controlled Insurance Program (CCIP) and Owner Controlled Insurance Program (OCIP) are insurance programs that are designed to “wrap up” most, if not all, all of the insurance needs for a project and generally include general liability insurance, workers compensation insurance, builder’s risk insurance and excess or umbrella insurance coverage as well.  The owner or general contractor of the OCIP / CCIP purchases workers compensation for all enrolled contractors; relieving them the responsibility of purchasing and providing coverage on the sub contractors workers compensation policy.  The insurance company issues a “master” policy to the OCIP / CCIP owner. Each individual sub contractor is assigned an individual policy number. Think of it like a mother with children.  The “mother” has the master policy and all of the “children” or sub-contractors, have an individual policy number.

When claims arise, somebody sends the individual contractor’s policy a code. This allows the loss experience to follow the contractor, not the OCIP / CCIP owner. Claims occurring on an OCIP/CCIP project will impact your EMR the same way as claims occurring on non-OCIP work.  For this reason, you still need claims management on these claims.

For those who don’t understand the impact of the EMR:

Assigned to your company is an EMR stands for Experience Modification Rating. This tells the state, potential clients, and the insurance carriers how well you are managing your employee injuries. The higher the integer (factor) the worse your workers compensation claims and employee injuries are. Although the OCIP/CCIP provides the workers compensation coverage, these claim statistics follow your individual company irrespective of who actually pays for the loss. Further, the EMR facotr predicates your credits or surcharges on your own workers compensation policy. This EMR factor increases or reduces your insurance costs. 

OCIP owner’s insurance company or third-party administrator manages workers’ compensation claims arising out of an OCIP project.

The claim handler gives primary consideration to the OCIP owner and ignores the fact that the individual contractor is also an insured.  For this reason we strongly recommend contractors continue to apply their own internal BEST PRACTICE reporting procedures so they can track and maintain their own records internally as these employee injury claims will still impact your organization.   Best practice claims procedures were designed to ensure critical information is gathered early on and documented which allows the claims to settle faster and a much lower payout. The longer the delay in reporting the claim, the higher the payout. The payout can increase as high as 40% or more.   

By managing claims in a similar way we encourage them to be, this will lessen the financial impact on both the employee and the business. We encourage you to have a point person within your organization who is tasked with closing out every open claim if you are not doing so already.

 
An action plan should associate with each employee injury claim to be complete. Insurance marketplaces frown upon open claims when you bring your account out to market for price quotes. Further, they impact your EMR adversely as well.

Reporting, monitoring, and closing out all of your employee injury claims.

These are key takeaways respective of OCIP / CCIP programs your company may be enrolled in.

This is irrespective of who is actually writing the claims check. The worker’s comp claims report to the Wrap administrator and will follow your company in the form of the EMR. Your state’s workers’ compensation rating board or the NCCI (National Council of Compensation Insurance) gives you this.

This drives the ultimate cost of your worker’s compensation insurance premiums in the form of either surcharges or credits. If your EMR exceeds 1.2 you may not be eligible to bid on certain federal contracts which has an “opportunity cost.” Some General Contractors may set a maximum allowable EMR of 1.0.  No sub-contractor with above a 1.0 can bid on future work with that GC.

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You keep building, we will keep helping you manage your risk so you can win future work.

 

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Workers Compensation Insurance, Workers Compensation Premium Audits

Important Updates to Your Experience Mod

The NCCI (National Council on Compensation Insurance), is a group that calculates Experience Modification Factors for companies across the entire United States. Some states have their own rating bureaus due to their size and complexity. For example, New York and New Jersey have the NYCIRB & NJCRIB respectively. For detailed explanation on what your Experience Modification Factor is and how it’s calculated see this site.

Some History

In the 1940s, Experience Modification Factors started being calculated, and they were based upon the dollar figures related to claims at that time. Amazingly, despite the rising costs and inflation, there were very few changes to the calculations between the 1940s and 1998. Then, following the changes in 1998, there were hardly any until 2013. In 2013 the NCCI, and the individual states that calculate their own Experience Modification Factor, adopted an updated “split points” policy that just means a simplification of the difference between the “Primary” and “Excess” parts of a Workers’ Comp claim. The Primary effects your Experience Modification Factor much more harshly than the Excess. By weighing the Primary heavier than the Excess, it protects against one or two larger, outlier claims throwing the calculations off completely (and unfairly).

The way the changes were implemented is that the Primary Split Point was formerly 5,000, and was increased in 2013 to 10,000 and then, over the next two years, would slowly increase to 15,000 which is where the NCCI believes it actually should be these days. (More on that here.)

Finally, on August 12th, 2015, the NYCRIB announced that it had approved the latest increase up to the 15,000 effective October 1st, 2015, as originally outlined. (More on that here.)

What This Means for your Business

What this means is that most companies will see another increase in their Experience Modification Factor following their next recalculation. That takes place on their “Unit Stat Date,” and, if left unchecked, your business could face higher rates, possible penalties, and Labor Department Violations.

What You Can Do About It

First, have you had your Experience Mod verified for inaccuracies? If not, it is imperative that you do so. As with any other calculation, there is a high proponent for errors.

The next step is to have your losses analyzed for personal trends and commonalities. If you want to see where you’re going, you should see where you’ve been. More than likely, you’re destined to repeat history.

Lastly, implement a risk management strategy to manage these claims more closely in order to exert some influence over them. Many companies are often surprised that these primary claims cost their company 30% more than it cost the insurance company. If you knew that, wouldn’t you want to do something about it?

To learn more about your experience mod and take charge against this issue, click here.

 

Construction Practice Group Content, Food & Beverage Practice Group Content, Human Services Practice Group Content, Risk Management, Transportation Practice Group Content, Workers Compensation Insurance

6 Ways to Lower Your Workers Comp Experience Mod

Is your business struggling with a high experience mod? Want to lower your workers’ comp costs while decreasing your risk exposure? We’ve put together a short and sweet guide to lowering your workers’ comp experience mod & costs as a result.

Click the link below to access it:

Free e-book

P.S: If you don’t know your company’s current modification number, contact a Risk Advisor and we will secure it for you gratis. 914-357-8444

Claims Management, Construction Practice Group Content, Food & Beverage Practice Group Content, Human Services Practice Group Content, Risk Management, Transportation Practice Group Content, Workers Compensation Insurance

Lower Your Experience Mod By Recovering Your Claims Costs

Philip was driving to pick up a tool rental for a construction job his company was working on when another driver rear ended his car causing Philip to sustain serious back injuries. Ultimately the workers compensation insurance policy purchased by the construction company Philip was working for paid the hospital bills and lost wages. Since the bill was north of $100,000 the effect on the construction company’s workers compensation experience modification factor was significant. It doubled both their direct and indirect workers compensation costs which impaired their future bids. Further it drove their mod well past 1.2 precluding them from bidding Federal & State work which carries a requirement that all bidders achieve an experience modification factor of 1.2 or lower.

Not only is this not fair, but it’s also quite common. The problem is 4 fold:

  1. In motor vehicle accidents like above workers compensation may be primary when an employee is injured in the course of employment.
  2. If a third party is clearly negligent, even a little bit, you (and/or) your workers’ compensation insurance carrier can subrogate to recover the funds.
  3. Few clients, and even fewer insurance brokers, track the progress of subrogation and make sure that the carrier or plaintiff does not compromise the client’s workers compensation policy.
  4. When the carrier does receive subrogation funds reimbursing them for the client’s claims costs no one notifies the state workers’ compensation board to make sure the experience modification factor gets re-calculated in the client’s favor. In situations like these, we may have the ability to go back 5 years contingent on the date of claim and state. What’s a potential 10% credit on your workers’ compensation premium each year for 5 years’ worth?

The net result is the business owner or client ends up with an artificially high experience modification factor which not only significantly impacts their unit cost structure, but it may also impact their ability to bid new work as the artificially high workers compensation experience modification factor will knock them out of contention.

It’s no secret keeping your experience modification factor low is a solid strategy to better position your firm to compete harder in a challenging business environment. Owners know that when folks are reviewing RFP’s they are looking at this critical business statistic. Your experience modification factor not only distinguishes you from your competition it also is a major cost driver.

We suggest the client looks for a Risk Advisor or broker that employs a claims advocate that works on behalf of the client who will track all workers’ compensation claims until they are closed. By simply following up every few months and asking the right questions you can have a material and substantive impact on lowering claims and ultimately your costs. This is especially true when there are other negligent third parties involved that could contribute to or for the claim in it’s entirety.

A wise friend once told me sunshine is the best antiseptic, with respect to workers compensation claims clearly this is wise advice and protocol.

For more info on lowering your workers comp experience mod, CLICK HERE.