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September 26, 2017

Experience Modification: What is it and how does it apply to your Workers’ Comp

Workers’ Compensation experience rating system is a merit rating system intended to provide employers a direct financial incentive to reduce work –related accidents.  It’s the only direct control an employer has on their workers compensation premium.   This is overseen by the Workers’ Compensation Insurance rating Bureau (WCIRB) for California and for out of state by The National Council on Compensation Insurance (NCCI).    

The experience modifications are published based on the payroll and loss data submitted for each policy holder.  The data is used to compare employers’ past loss record to all members in the same industry classification. 

The average Ex Mod for all class codes is 100%

  • A better than average experience modification is below 100%
  • A below  average experience modification is over 100%

*If payroll and Actual losses balance perfectly then your Experience Modification would be 100%.  If payroll is too low for the dollar amount of the Actual Losses then your Ex mod would be above 100% and your insurance premium would be negatively affected.  

* If the dollar amount of your Actual losses are lower than what is expected, then your Ex mod would be below 100%.  This would have a positive effect on you insurance premium.

What can you do to positively affect your experience modification?      

  • Ensure that the WCIRB or NCCI are using the correct payroll and class codes
  • Review your claims frequently to verify the claims are yours
  • Less frequency of claims is key
  • Make sure employee classifications are accurate
  • Try and reduce your claims cost
  • Close your claims as quickly as possible
  • Offer return to work /modify duty programs
  • Offer formal safety plans
  • Implement strong loss control prevention measures
  • Get to know your Occupation clinic to help manage care
  • Safe work environment

The goal is to control your losses and pay close attention to them.  The longer they stay open can adversely affect your premium and ex mod.    Frequency of claims is more prominent now than ever, so whether small or large both can drive the cost up considerable.   Stay current with the statuses, so you know how they are tracking and when they can be closed out.   Claims can get out of control and before you know it your cost are high and your experience mod is through the roof. 

If you have questions about your current ex mod or want to learn more about it contact the Home Care insurance team at Heffernan Insurance Brokers today.

Tami Unsworth
Home Care Specialist
D: 925.942.4619
[email protected]

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