Mod Increases To Over 1.0
When a company’s Mod increases to over 1.0, it can rarely have no other effect to a budget other than paying more for WC coverage.
There are actually more than five concerns with a Mod that crosses the neutral line. A neutral Mod is 1.0.
The five main budget developments – (cash) are:
- Certain carriers in certain markets may not underwrite coverage for companies with a greater than 1.0 Mod. In other words, you may have to change carriers to a possibly more expensive choice.
- Governmental entities and some private companies will not use subcontractors with a Mod of 1.0 or greater. Some have dropped this to .9 in certain markets. This is a way to lose a large chunk of business very quickly. I have one on my desk with this situation as I write this article.
- Mods are trend-based which means your Mod has some factor that will likely be tabbed your Mod for at least the next two years. Rarely does a Mod spike for just one year. The time to act is now when the Mod increases to over 1.0 .
- The obvious budget buster is your company or organization will pay more for your coverage than your safer competitors. The Mod is a direct multiplier. Look at your last policy and premium audit from last year.
- Your company may have to move funds away from other areas and increase your safety and risk management program budget to turn the tide. Presenting this budget shift to a Board or C-level managers can be a tough sell.
There are actually more than five. These are the ones that we have seen recently when being called in to assist clients with their Mod.
Feel free to use the search box in the top right hand corner of the blog for more information on Mods.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com