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If you don’t understand the definition of experience rating modification factor (E-MOD), you are not alone. However, it is a critical part of many employers’ workers compensation insurance costs. E-MODs are intended to predict future losses of an individual employer by analyzing its past losses. It’s also a factor that significantly impacts workers’ compensation premiums and is viewed as an indicator of industrial safety. Learn how you, whether a crane operator, rigger, iron worker, sales manager, CEO, or somewhere in between, can impact your company’s E-MOD both positively and negatively. Industry experts, Mr. Moore and Mr. Nelson, demonstrate how the new E-MOD works and what you can do to help keep your company’s E-MOD below 1.0, ensuring your company is included in the bidding process. Speakers: Robert Moore, Chief Legal Counsel, NBIS, Christopher Nelson, Director of Risk Management, NBIS
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“Developing a Safety Culture”
- The New Workers Compensation Experience MOD - Understanding and Improving Your CSA Performance
Why is There an E-Mod?
E-Mods are an adjustment to average rates to recognize employers who have done better or worse than others over three years. The E-Mod adjustment is most sensitive to the most predictable losses.
Published Workers Compensation
Rates (Average Rates)
Benchmark for
Payroll
Job Classifications
Industry Standard Individual Employer’s
E-Mod (Loss Experience)
Who Calculates Your E-Mod?
• National Council on Compensation Insurance (NCCI) collects data and calculates E-Mods for most states
• NCCI proposed E-Mod calculation changes began in 2013
NCCI
The E-Mod
• An experience modifier (e-mod) is a multiplier applied to the premium of a qualifying policy and provides an incentive for loss prevention
• The e-mod represents either a credit or debit that is applied to the premium before discounts
• If your company’s loss experience is more costly on the average, the result is a debit e-mod, or surcharge on premiums. If your company’s experience is less costly than the industry average, you will receive a credit e-mod, or discount, on your premium
Average Experience Mod
Factor
1.00
Greater than 1.00
Less than 1.00 Credit Modifier =
Lower Premiums
Debit Modifier =
Higher Premiums
Experience Mod Impact
1
Basic Features of the Formula
• Formula divides actual losses into “Primary” and “Excess”
– Primary losses carry the most impact and are currently defined as the first $5,000 of each claim
• D-Ratios determine the percentage of expected losses that are primary losses in a given class code
• Individual actual losses are capped to reduce the impact of a catastrophic loss
Losses
Primary Losses
Excess Losses
Med Costs Share of Total Cost is Increasing Steadily
WC Med Cost Will Equal 67% by 2019 if Trends Hold
Projections by NCCI • Credit Mods:
– 46.4% will drop by more than two points – None will drop by more than ten points
• Debit Mods – 17.8% will increase by more than two points – 7% will increase by more than ten points
Changes – The Impact
Summary of Changes
2015: $15,000 + claim inflation For an est. total of $17k in 2015
2013: $10,000
2014: $13,500
The primary actual loss level will increase in stages:
The D-ratios will increase to adjust the expected primary losses
Impact of Split Point Change
• In general experience rating credits will become larger and experience rating debits will become larger
• Over 76% of experience rated employers will see a reduction in their mod (most in the range of 1% - 5%)
So…What Can We Do?
Claims Management Program
Pre-Injury vs.
Post-Injury
Injury Prevention & Management
• Safety—A good safety program should be at the center of your system to help identify and control the risk of injury in your operations.
• Hiring Practices—Good hiring practices can help you hire skilled, knowledgeable and physically capable employees who are suited for the job.
• Select Provider—Good reporting, prompt medical attention and excellent communication are at the heart of effective workers’ compensation claim handling. By designating a physician or clinic to handle workplace injuries and illnesses, the injured employee receives consistent, quality medical care with a focus on returning to work.
• Return to Work—A return to work program is designed to bring injured employees back to work safely and as soon as possible in a medically approved and accommodated capacity.
• Health and Wellness—Health and wellness programs are focused on preventing employees from developing chronic conditions that drive these higher costs.
Injury Prevention & Management Drug & Alcohol Testing Program
Three Stages: 1. Pre-Employment 2. Reasonable Suspicion 3. Random
Develop a Comprehensive Program!
• Appropriate Training – Orientation – Safety Training – On-going On-the-Job Training
• Hazard Recognition • Worker Observations • Ergonomics
Injury Prevention & Management On-the-Job
Pre-Injury Strategies
• Accident Reporting Program • Accident Investigation • Direction of Medical Care • Drug & Alcohol Testing Program • Return-to Work Program
Post-Injury Strategies: Execution of the Plan
• Prompt Reporting of All Claims • Collect ALL the Accident Details • Clear Direction of Medical Care • Immediate Drug & Alcohol Testing • Constant Monitoring, and
• Corrective Action When Needed
Improved Communications Between… • Injured Worker • Medical Provider • Employer • Insurance Company/Claims Administrator • Everyone!
What Can you Do?
Questions?
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