There are 3 simple ways to reduce your Experience Modification Factor. Simple in the sense that they are all services for which you engage an outside party and require little time or effort; so you can focus on what you do best.
These 3 ways are 1) use of an independent auditor, 2) have a reserve audit performed, and 3) injury triage. And, by the way, none of these are redundant services. They complement one another by addressing separate potential trouble areas.
Reduce Experience Modification Factor NOW Through Independent Audit
Have an independent auditor perform an audit of your insurance carrier’s data reporting. An experience mod contains a lot of data; claims, payroll, and classification codes. There are NCCI manual rules, Independent Rating Bureau manual rules, and state regulations that all impact and possibly change how data is to be reported. And, there are all kinds of special circumstances, like acquisitions or sales of businesses and divisions, that further complicate manual rules and regs. It does really take an expert to properly review an experience mod.
Having a comprehensive audit of your work comp program (not just your experience mod) is important because of the fact that determining proper work comp payroll and classification are drivers of your experience mod (see Experience Modification Rate Reviews). If you your insurance company auditor is not properly capturing work comp payroll or properly classifying employees, then your experience mod is wrong.
Cytron Group LLC’s expertise is performing contingent, comprehensive work comp premium audits. I mention the contingent nature of our work because errors in experience mods are so common that we can afford to not charge for our time.
Reduce Your NEXT Experience Modification Factor Through A Reserve Audit
Reserve auditing is an important way to proactively manage your upcoming experience modification factor. The goal of a reserve audit is to identify open claims with reserves that appear suspiciously high and try to negotiate more favorable reserves.
If you don’t have online claims access (you should request this from your carrier anyway), start by requesting currently valued loss runs. Then, start the conversation with your broker’s Claims Advocate or a 3rd party consultancy about reviewing open claims. You’re not going to want to waste time questioning everything, but you (or your representative) can identify claims with reserves you believe are suspiciously high and address your concerns with the adjuster.
If successful negotiating lower reserves, you will decrease your upcoming Experience Mod and directly reduce the cost of your renewal premiums.
Remember, though, timing is important. You want to have the whole process wrapped up 6 months before you renew due to a deadline known as your valuation date (contact me if you want a more detailed explanation). Also, don’t want to wait and give yourself just 60 or 90 days to accomplish this. Start early and let your broker or consultant know that you want to go through this process shortly after you renew.
Reduce Future Experience Modification Factors Through Injury Triage
Benefits that Telephonic Injury Triage customers enjoy include:
· Reduced Claims
· Reduced Costs
· Reduced Litigation
· Reduced Experience Modification Factors
Without going into too much detail here, Injury Triage is a preclaim service to help employers make good decisions about what to do when one of their employees gets hurt. It is useful for anything in between a band-aid and an ambulance. Historically, 43 % of the calls that Medcor receives do not turn into claims.
Injury Triage is relatively inexpensive and the ROI normally impressive. I have more information and a 90 second video here. But, I have a Medcor case study in front of me and the major points are:
· Customer had 63 total calls/incidents in 2018.
· 31 (49%) of the calls resulted in self-treatment/first aid rather than off-site medical treatment.
· Those 31 calls represent incidents that would have otherwise resulted in 31 claims appearing on customer’s experience mod worksheet for 3 years.
· Customer’s average med-only claim cost was $685 in 2018. So, $21,235 (685 X 31) in claims won’t appear on customer’s experience mod worksheet for 3 years.
These are three suggestions that can help reduce your experience modification factor in the near and intermediate term. If you have any question or would like to discuss any unique circumstances effecting your business, please don't hesitate to reach out.
Stuart Cytron, MBA has been published in trade journals such Construction Forum St. Louis and St. Louis Business Journal among others. You can read more about Stuart and how he developed a passion for helping businesses reduce work comp expenses on his website.