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What Is An Acceptable E-Mod (X-Mod) For My Company?

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An Acceptable E-Mod (X-Mod) Usually 1.0

The question is what is an Acceptable E-Mod (X-Mod). The level of questions on XMods/EMods usually increases this time of year. The largest percentage of policies renew on January 1. The rating bureaus such as NCCI usually begin to promulgate and report the E-Mods for the January 1 polices starting late August and continuing through September.

Business man hand and Percentage Rate Acceptable E-Mod NCCI
(c) 123rf.com

There is actually no exact level of an acceptable E-Mod or X-Mod. As the saying goes, we can always do better. As I have posted often, the average E-Mod for the same type of business is 1.0. At this level, your company is considered to have the same level of safety as similar companies.

I have seen Mods as low as .6. I have also seen Mods at 2.2. I am not sure how a company would improve with a .6 Mod. I have seen companies with a very low Mod suddenly increase to over 1.1 with a sudden spate of a few minor accidents.

I look at Mods as being similar to grades in school. It is much more difficult to keep an A grade than it is to improve from a D. The E-Mod formula in its simplest form is:

Actual Losses /Expected Losses.

A company that provides administrative assistants is going to have a much lower level of expected losses as this type of company is considered to be very safe. The unfortunate result of being a low risk company is that a very few minor injuries can cause an E-Mod to increase dramatically.

Using the formula above, the administrative assistant company’s expected losses for a given policy year was $8,500. The actual losses were 9,500. The company’s E-Mod would be

9,500/ 8,500 = 1.11

Vector Graphic of insurance icons Acceptable E-Mod Actual Losses /Expected Losses
(c) 123rf.com

Using the same actual losses, a trucking company would have a higher level of expected losses as they are considered to have more risk

9,500/13,500 = .70

The above example shows that companies with lower expected losses must be as safety conscious as any other company. The E-Mod is affected even more heavily by smaller losses.

The bottom line is there is really no such thing as an acceptable E-Mod (X-Mod). If a company becomes lax on their safety for even a brief period of time, an accident that may have been avoidable is now part of their Mod.

A company with a .6 E-Mod must be vigilant in their safety program. A company with a 1.6 E-Mod must improve their safety program immediately while keeping their Mod from decaying further.

“E-Mod, Mod, and X-Mod are basically the same thing. X-Mod is used by California’s rating bureau.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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