Are you happy with your workers’ compensation experience rating modification, also known as a MOD rate? If it’s over 1, you probably aren’t. It may be keeping you from bidding on jobs, and it certainly affects your insurance premiums. You may be wondering exactly what you can do about it. A proactive broker can help. Here are some strategies we’ve used to help our clients lower their risk.
Make sure your comparison is fair
Your MOD rate is based on theoretical comparisons with companies of like industry and size. So, you’ll want to make sure you’re reporting your payroll classification data accurately. Whether intentional or unintentional, misclassifications do happen. Your carrier and the NCCI are not always representing your best interest with their annual audits and calculations. To make sure your interest is represented, you’d be wise to ask your broker to do a risk review and audit at no cost to you.
Your broker can review the carrier’s audit and the NCCI’s worksheets and calculations to make sure they match up. Brokers also can help you get out in front of any differences and assist you in making changes. In just the past few months, we’ve discovered a few NCCI mistakes, one of which resulted in $61,000 in savings.
Analyze and address your claims
Your claims experience over the three years prior to the previous year determines your MOD rate. So, it pays to look at trends and address them with safety programs.
For example, if you’re seeing a lot of injuries to a certain body part – say leg fractures – you can look into the causes. Do you need to address ladder safety or adjust the way your employees do a particular function? If you’re seeing a lot of hand lacerations, maybe you need to review your gloving program. The Miller Group has resources to help with data analysis and risk mitigation planning.
Addressing the root causes of claims trends may not result in an adjustment immediately, but it can begin to make a difference in your premiums over the next year or 18 months. You also can ask for a recalculation if you find a significant error or adjustment in your workers’ compensation claims.
Manage exposure to open claims
Your MOD calculation looks at both paid and open claims. That means you may be getting dinged more than necessary for open claims or high reserve amounts for anticipated claims, which are set by your carrier.
There’s a two-month period between the annual valuation date and the reporting date. If significant open claims get closed or reserve amounts are lowered during that period, you could have a strong case for a recalculation.
It’s also wise to make a concerted effort during the seven to nine months before renewal to close claims. You can even ask the carrier to reduce the amount in reserve for certain open claims, if the facts support you and you have a convincing narrative that could change the adjuster’s mind. For example, say an employee was treated for a broken bone for $10,000, and optional follow-up surgery would cost $30,000. If the employee has stated they do not intend to choose surgery and that option is no longer on the table, you can ask your carrier to reduce the amount in reserve. Your broker can help advocate for you in these kinds of negotiations.
You may feel victimized by your MOD rating today, but you do have the power to reduce your MOD rate. If you’d like some help, let us know.
By Brad Miller, Senior Claims Advocate