What is the Experience Modification rate, and why are they important?

 An EMOD (Experience Modification) is a multiplier, and it is used to factor the cost of the premium. The most important number in EMODs is 1, which is considered the unity mod. If a customer’s EMOD is less than 1, they will get a credit. If a customer’s EMOD is more than 1, it is a debit. For example, if an EMOD is .75, the customer will pay 25% less for their worker’s compensation insurance. If an EMOD is 1.25, the customer will pay 25% more for their worker’s compensation insurance. The rating bureaus constructed these rates because their theory is that the “better the safety program, the better the Experience Modification rate will be.”

Are you interested in learning more about the Experience Modification rate? We invite you to join us on September 12th at 2 PM CST for an insightful and practical webinar that will empower you to take control of your Experience Modification Rate. Take advantage of this chance to learn from industry experts and implement changes that could significantly benefit your business. Click here to learn more and register now.

How can Employers improve their Experience Modification rate?

There are several things that employers can do to lower their EMOD rating. The most important thing is to have a solid safety program and a commitment to safety. Employers should look at the near misses and what are the drivers of these injuries. It is not enough to have safety equipment; there must be enforcement for wearing and utilizing it. It is also crucial to have a return-to-work program available when injuries do occur. Providing light-duty work to an injured employee with light-duty restrictions can change the trajectory of the claim. Light-duty work will also lower the indemnity reserves, impacting the EMOD score.

How can reporting claims help? 

Some claims may seem minor, so an employer may think they do not need to report them. This practice is how things can go very sideways. For example, an injured worker cuts his leg; unbeknownst to the employer, he has diabetes. The claim wasn’t reported, and the injured worker ended up with an infection. by the time it was reported to the carrier, the injured worker may need his leg amputated. Every claim that comes in is important and needs to be reviewed. The other issue with not reporting is that employers are busy with hundreds of things, and they get busy, and the injured worker may feel no one is helping him. One or two missed phone calls or not scheduling an injured employee’s appointment may cause the employee to seek an attorney. Once this occurs, a claim that may have cost about $1000 will likely cost about $25,000.00 or more. As our SVP Chief Claims Officer and Host of Adjusted Greg Hamlin always says, “Once the toothpaste is out of the tube, it is hard to put it back into the tube.” Medical-only claims are discounted by 70%, and only 30% are attributed to the EMOD, so there isn’t any reason not to report.

How can the carrier I choose affect my Experience Modification Rate? 

It is important to select a carrier that partners with you. Cheaper is not always better or cheaper in the long run. A cheaper carrier may seem like a great choice, but if an employer has any injuries, they will drastically increase their rates year after year. It will end up being more expensive to go to the cheaper carrier than the carrier that is priced on point. Our Risk Management Team is one of the many things we offer our insureds. Our team partners with our insureds and assists them by providing safety training. We love helping our insureds and want to help them bring their EMOD down. However, the most important thing we can do is help our insureds provide a strong safety culture for everyone and help prevent injuries. We know it takes hard work and effort, but it is what we are passionate about.