The Experience Mod System’s Hidden Good Side
The Experience Mod system can silently help your company. The Workers Compensation Experience Modification Factor (E-Mod/X-Mod/Ex-Mod) system can seem complicated and cause very high premiums at times. Three times over the last few weeks, I have heard or read different inaccurate comments about the E-Mod system.
I thought I would post a reply to those comments by pointing out how the E-Mod system may help your company.
- One bad claim can ruin our E-Mod – In most states, The E-Mod system has a maximum claim amount that can be charged to your company’s E-Mod. As I have posted in the past, four $25,000 claims are much more harmful than one $100,000 claim. One bad claim will not hurt your company. Rating agencies realize that companies may have one serious accident in the course of doing business.
- We pay our small claims out of pocket – The E-Mod system will discount the medical-only claims by some factor – usually 70%. There are many dangers when paying your small claims out of pocket such as medical control. The 70% discount was designed to encourage employers to file all Workers Comp claims with their carrier.
- One bad year of claims would ruin our insurance program – The E-Mod system does not balance this out as well as #1 on the list. However, the E-Mod system can keep your company from taking such a hit to your insurance premiums by spreading the risk over three years of Experience data. This is one of the advantages of paying regular insurance premiums and not having a large deductible or self-insured unless your company or organization is large.
I am not that big of a fan of the Experience Mod system. It is the one in place. Winning the E-Mod battle means playing by their rules. The E-Mod system does have a few penalties built in for employers who wish to play by their own rules. I will comment on that next time.
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