Lower Our E-Mod Or X-Mod
How can we lower our E-Mod? This is a question I received from one of the blog readers after I posted the Workers Comp E-Mod or X-Mod Factor formula earlier this week. This will fit well into the post that I was going to do on breaking down the E-Mod formula.
If you look at the Experience Modification Factor formula, you will notice that most of what is on the top of the fraction is also on the bottom of the fraction. The real difference is that E-Mods and X-Mods come down to the actual losses divided by the expected losses. There are many other values in the formula so it is not quite that simple. Reducing your actual losses or increasing your expected losses is important. Even more important is reducing the number of losses that reach $5,000.00. This is known are the Primary Loss portion of the claim.
The Actual Primary Losses are what costs your Workers Comp insurance program the most premiums due to an increase in the E-Mod. The Actual Excess Losses still cause a rise in the E-Mod, but not as significantly as the Actual Primary Losses. How does this happen the Excess Losses have a discount factor of sorts built into the E-mod equation. Whew!
Let’s get back to how to save Workers Comp $. The ways that you can reduce your Workers Comp E-Mod are:
- A devout safety program – an accident that never happens saves you 100% of the $ compared to if the accident did happen.
- Using the Four/Five Keys to Saving Workers Comp $ – you may search for those blog posts using the search box. Type in keys
- Reviewing your claims loss run every time you receive it
- Know when your Workers Comp reserves affect your E-Mod also known as the Unit Stat date.
- Make sure your Workers Comp payroll figures are accurate. There is a big difference between actual payrolls and Workers Comp payrolls.
- Make sure your Workers Comp classification codes are correct. The SIC or NAICS codes have very little to do with your Workers Compensation Class Codes.
The last two bullet points have more to do with adjusting your Expected Primary and Expected Excess losses.
Next Up – Do Not Be Fooled By A Small Claim Reserve
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