Workers Comp Large Deductibles Still Have E-Mod – Shocker
The Workers Comp Large Deductibles have always been reported to the rating bureaus.
Reader Question – We have a large deductible. Our Company is basically self insured. We have heard this comment often lately as larger employers seek to control their Workers Compensation costs by entering into large deductible arrangements.
Self-insuring for Workers Comp can be a way to cut comp costs if done properly. However, when you are insured with a large deductible, the rating bureaus still promulgate your Experience Modification Factor which can be accessed by almost anyone.
A self insured employer will “drop off the radar screen” with the rating bureau. As no insurance carrier is covering the employer, there is no Unit Stat report filed with the rating bureau. Quite a large number of our current clients are shocked when I tell them that I can pull their E-Mod even while they had or have been in a large deductible program. Your company’s E-Mod will not revert to 1.0 if you decide to end your large deductible program. Companies that are fully self insured will not usually have an E-Mod.
Many companies have signed on with a large deductible program thinking their high E-Mod will fade away. We recently had a manufacturing client contact us as they decided to end their large deductible program and go back to the open market with a regular Workers Comp insurance policy. After examining many variables, we had advised them if they ended their large deductible program, they would start with an E-Mod of 1.45.
Our client would have ended up being put into the risk pool with much higher rates then before they began their large deductible program. They decided to stay with the large deductible and we are now working with them to see if they can be fully self insured. Their bottom line savings on becoming self insured even from a large deductible is about 19%.
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