E-Mods X-Mods risk concerns have caused many governmental units to now require a Mod at a certain level as a minimum requirement to do business with them. One of the main calls and emails that we have received over the last two years is a company very worried that their Mod will increase over 1.0. Their concern is very legitimate as almost all government contracts now require an Emod or Xmod of 1.0 or less with no exceptions.
The Emod or Xmod above a 1.0 can be a heavy deterrent in bidding on and renewing governmental contracts. A Mod above 1.0 is called a debit mod as your company is going to pay extra for Workers Comp coverage. The opposite is true for a credit Mod that is 1.0 or below. Your company is going to receive a credit for your safety record.
This blog and a large % of the articles are dedicated to reducing your Mod. Self insureds are not out of the system. We have been contacted by many different governmental agencies to perform a Loss Developmental Factor (LDF) analysis on self insureds during an RFP process.
There are many ways to reduce or contain your Workers Comp Mod. The easiest is to immediately initiate or increase your safety program efforts. The Mods are your company’s safety score much like a credit score.
Mods and credit scores are very similar in that even though there may be a great explanation why your company has a higher Mod, the cutoff is 1.0. This is similar to applying for a home mortgage refinance and the bank saying 720 or lower will just not receive an approval.
The next step in lowering your E-Mod or X-Mod is knowing where your Mod stands with your rating bureau (NCCI, WCIRB, and others). The rating bureaus are more than happy to send you a copy or you can ask for one from your agent.
Mods are not calculated on your renewal date. Waiting to see what your Mod is at renewal is wasting your time. Your Unit Stat date is the most important date for your Mod. Monitoring your loss runs is also a great technique in lowering your Mod.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.