A high ex-mod – or experience modification factor – drives up workers’ comp insurance premiums. However, as an agent or broker, you can play a critical role in helping clients understand and manage their ex-mod effectively.
Following are strategies for helping clients achieve better outcomes and build stronger, safer businesses – even those with employees in high-risk environments. But first, let’s review what is ex-mod.
A Quick Ex-Mod-Primer
Experience modification is a calculation used by insurance companies to adjust a company’s workers’ comp premiums based on their claims history. Essentially, it compares a company’s actual claims experience to what would be expected for its industry and size.
- If a company has more claims than expected, its ex-mod score will be higher, and its premiums will increase.
- If a company has fewer claims than expected, its ex-mod score will be lower, and its premiums will decrease.
Ex-mods are calculated based on a full 3-year period starting 4 years before a current policy effective date. So the current year and previous year are not included.
A Low Ex-Mod is a Great Advantage
In today’s crowded marketplace, helping clients lower their insurance premiums can be a significant competitive advantage. Cost savings are a powerful incentive for clients to stay with an agent or switch to one that can offer better rates.
So how can you help clients lower their ex-mods and premium costs? Here are 6 key strategies:
1 – Analyze Claims Data
Review claims data regularly to identify trends and areas of concern in clients’ workplace safety practices. This data can help you understand the types of injuries occurring and the underlying causes, which can inform the development of targeted safety programs to prevent injuries.
For example, if the claims data shows a client’s employees are experiencing a high number of back injuries, you can recommend programs and resources to address this issue, such as ergonomic safety technology, safe lifting techniques or changes in the layout of the work area.
Analyzing claims data can also help you identify areas that need improvement. For instance, if the data shows a client’s employees are experiencing a high number of slips, trips and falls, you can work with them to uncover the root causes of these incidents and develop a plan to address them.
2 – Recommend a Safety Program
Recommend safety programs specific to clients’ industries and needs to reduce the frequency and severity of workplace injuries. First, assess your clients’ current safety practices – analyze claims data, review safety policies and procedures and conduct safety audits.
Then, suggest applicable programs such as safety training sessions for employees and management, consulting services to help identify workplace hazards and technology and equipment recommendations to reduce the risk of injury.
For example, if you work with a healthcare employer you may recommend employee training for safe patient handling and wearable safety technology to actively help improve care providers’ posture on the job. Wearables can serve as a real-time coach, alerting employees when they move in a risky way and helping to change behavior over time. Additionally, data collected by the devices can uncover areas that would benefit most from specific training.
3 – Provide Risk Management Advice
Offer guidance on how to identify and control risks, respond to workplace injuries and manage claims effectively to help clients develop a proactive approach to risk management and workplace safety.
Gain a thorough understanding of the businesses and specific risks associated with your clients’ industries through site visits and consultations. Then based on your assessment, offer targeted risk management advice.
For example, if you work with a manufacturing company you may provide suggestions on how to identify and control potential hazards on the production line, such as proper equipment maintenance and employee training on the safe use of machinery.
4 – Encourage Timely Reporting & Investigation
Encourage timely claims reporting and investigation to help clients avoid common mistakes that can lead to higher ex-mod scores and work comp premiums. For example, failing to report a workplace injury promptly or conducting an incomplete investigation can result in delayed or inaccurate claims payments, which can lead to disputes and appeals that can drive up ex-mod.
You can also help clients establish clear reporting procedures for workplace injuries and educate employees on the importance of reporting injuries promptly. Additionally, work with clients to develop effective investigation protocols and provide training on how to conduct thorough investigations.
5 – Advocate for Fair Claims Handling
Work closely with your clients and their insurance carriers to ensure claims are handled fairly and efficiently. This includes advocating for the injured employee to receive timely and appropriate medical care and ensuring the claims process is transparent and fair.
One key strategy for lowering ex-mod is to help injured employees return to work as soon as medically possible. Encourage clients to work with their insurance carrier and medical providers to develop a return-to-work plan that supports injured employees while also minimizing the impact on ex-mod.
Additionally, work with clients to monitor the progress of their claims and ensure they’re resolved as quickly as possible. This may include following up with insurance carriers and medical providers to ensure claims are moving forward and addressing any issues or delays that arise.
6 – Provide Ex-Mod Education
Finally, educate your clients on what ex-mod is and how it affects their workers’ comp premiums. Many employers aren’t familiar with the concept or how it’s calculated, and may not be aware of the impact their claims history has on their workers’ comp costs. Education may include:
- Explaining how the experience rating system works
- Providing information on the three-year claims history used to calculate ex-mod
- Communicating the importance of timely reporting and investigation of claims
- Discussing the impact workplace safety and risk management practices can have on ex-mod
By implementing these strategies you can help your clients achieve a much lower ex-mod in just a few years, which can translate to significant premium cost savings. Furthermore, clients who implement effective safety programs may be more attractive to insurers, which can help them secure better rates and coverage options.
And remember, helping clients lower their insurance premiums benefits you as well. You’ll build long-term relationships with your clients and better attract and retain business.