Experience Modification

While the insurance industry sets the “base rates” by classification for workers comp, your “true final cost” for workers comp protection is the result of implementation of the Correct Comp system.

What is an experience modification (“ex-mod”)?

It’s a percentage that compares the payroll and loss (claims) history of a company to those of similar-sized companies in the same industry. For example, if a company has a better than average loss record, their ex-mod would be less than 100%.

What data is used to calculate an ex-mod? 

Normally, an ex-mod is calculated based on the actual payroll and losses reported by the insurer for the last three, full consecutive policy years.

Are You Sure Your Experience Modification Factor Is Correct?


Let me ask you two questions:

1. Are you certain your Experience Mod is 100% correct?

2. Do you know what it is right now?

I imagine your current work comp program has led you to believe that your current mod is really terrific!

Let me tell you about a business that hired us to implement our ButlerVet process eighteen months ago- a company, who like you, thought they were doing really terrific. Their payroll was around 1.3 Million.  After introducing them to the ButlerVet system, after their 2nd Valuation date this past year, we’ve gotten their mod down to 74! How much do you think that has meant to them?

Answer:

Well, let’s put it this way ….The owner, his 2 kids and wife could go to Hawaii…twice on what we did for them.

Has your current work comp program ever shown you the 4 ways your experience modification can be managed and driven down to the lowest possible level…. like we did for the guy who took his family to Hawaii?

What was the dollar reduction of reserves and corresponding drop in your Experience Mod from your last claims review conducted by your current work comp program?

Just out of curiosity, has your current work comp company made you aware of the lowest possible level that your Experience Modification can be?

Has anyone has told you how much an 11 point reduction would lower your premium?

Maybe lowering your experience modification isn’t that important you”? Or is it?


Your Experience Modification represents either a credit or debit that's applied to the final workers' compensation premium premium you pay. An Experience Modification of 1.0 results in your company paying the true base rate per $100 of employee payroll offered by a carrier. An Experience Modification of less than 1.0 (.76 for example) is a Credit Mod causes the net premium you pay to be credited 24% An Experience Modification factor more than 1.0 (1.21 for example) is a Debit Mod, which means your losses cause your net premium to be surcharged 21%. We can help you manage your experience modification.

Q: What determines how much I’ll pay for my premiums?

A number of factors go into determining the annual premium your insurance carrier will charge. These include your industry classification, your company's past history of work-related injuries (known as your experience modification), your payroll, any special underwriting adjustments such as use of a certified health care organization, and any special group or dividend programs you may be eligible for.