A Safety Person vs. The X-Mod or E-Mod
Is there one number that a safety person should be the most concerned with in their job? I have asked this question often when presenting to Loss Prevention, Safety Engineers and similar positions. The answers that I often hear are:
- Number of accidents
- Lost workdays
- Self-inspection results
Those are all important. When a VP or President of a company asks me what number is the most important in evaluating a Work Comp program, I always say the Experience Modification Factor (E-Mod or X-Mod). Why? Because it is the distilled number of what the claims costs are for a certain company. In other words, it is the insurance carrier’s notation of how the safety program is performing over a few years, not just one.
Many safety personnel have been fired due to the E-Mod X-Mod not turning around quickly enough. Employers and their safety departments sometimes do not realize that the Mod covers from four years ago until one year ago.
What just happened in the prior year, be it good or bad, does not show up on the E-Mod X-Mod until the following year. A great way to avoid concerns with the safety department or risk manager is to forecast the Experience Mods into the future.
Oh, and self-insureds are not immune from the E-Mod. There is a different term for the E-Mod for self-insureds and it is the Loss Development Factor (LDF). The LDF may cover more years than the E-Mod, but it is still the ultimate evaluator of a company’s safety program.
I often hear from safety personnel that the insurance is “some other department’s problem.” Nothing could be further from the truth.
Bottom Line – The LDF or E-Mod/X-Mod is the Workers Comp safety program’s effectiveness turned into cash.
Next Up – How long does one bad year of claims cost a company’s Workers’ Comp program?
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