What Is A Workers Compensation Experience Modification?
An experience modification/modifier is a number that relates directly to the amount of claims you experience as a business. Calculated based on the industry average for claims, the modifier also takes the size of organizations into account. A given industry’s average is expressed as 1. A specific businesses’ experience modification is expressed as a number less than, equal to, or greater than 1. If a business has a modifier of one, they are considered exactly average for their industry and size. This results in no change to their premium from the modifier. If a business has a modifier that is more than 1, their premium will increase. A modifier less than one will result in a decrease in their premium.
What Does A Workers Compensation Experience Modification Do?
Experience modifications can either lower or raise your insurance premium. The premium and modifier are multiplied together to determine the new amount. This is a way for insurance carriers to reward companies that are generally safer within a specific industry while deterring companies from unsafe behaviors.
For example, assume you have a monthly workers compensation premium of $1,000. However, there have been more claims in the previous policy period than what was expected. As a result, your experience modifier is 1.5. This means your new premium will be $1,000 X 1.5 = $1,500. Now say you have experienced less claims than expected for the previous policy period. This resulted in a modifier of 0.5. Your new premium would now be $1,000 X 0.5 = $500.
Experience modifiers are important in determining the amount you will have to pay an insurance carrier in premiums for each policy period. The more claims you experience the higher your modifier. The less claims you experience the lower your modifier.
Lowering Your Workers Compensation Experience Modification
So now that you understand the importance of experience modifiers you must be wondering how to ensure you have a lower experience modifier. Obviously, a business wants less claims. Of course, there is no magic wand to lower claims. Lowering your claims and thus lowering your premium takes serious planning and commitment from employees. Below are a few measures that business owners can take to attempt to lower their premiums.
Ways To Control Claims
Promote a safety-first workplace. Employees have a specific rate of productivity they must achieve to ensure that the business meets it daily goals. However, businesses should not sacrifice safety for productivity. Make it apparent to your employees that would rather have them be less productive and fully safe than fully productive and less safe.
Be careful with the use of online images. There is copyright protection on many internet images. Using these images on social media or on printed marketing material can result in your company being sued for copyright infringement. Use sites that have the expressed interest of offering images that are in the public domain to avoid the legal issues and negative effects on your claim history associated with breaking copyright laws.
Thoroughly train employees especially on preventing slips, trips, and falls. The number one general liability claim that businesses experience is customer slips, trips, and falls. Customers are likely to sue a business for medical costs when they experience bodily harm on the premises. Make sure your employees know the importance of not leaving tripping hazards on the floor and setting up wet floor signs when applicable.
Create a recovery at work program to mitigate the affect an injury will have on your experience modifier. Recovery at work programs allow employees to take on low impact tasks that they would not normally do. The employee keeps the same hours and pay but will often have lower productivity. This trade off not only prevents an increase to your modifier it also makes the employee more likely to recover quicker.
Independent Insurance Agents
Worker compensation is simple yet complex. At Konen Insurance we look to find the small details that help businesses save money and get the coverage they need. If you have questions about your worker’s compensation premium or experience modifier contact us and we will help you review your options. Our agents work with companies from every industry regardless of risk.
