Bad Developments With Mod Increases To Over 1.0
When a company’s Mod increases to over 1.0, it can rarely have no other effect to a budget other than paying more for WC coverage.
Please note that the term Mod also can mean E-Mod (EMod), X-Mod (XMod), EMR, Ex-Mod, Experience Modification Factor, etc.
There are actually more than five concerns with a Mod that crosses the neutral line. A neutral Mod is 1.0.
The five main budget developments – (cash) are:
- Certain carriers in certain markets may not underwrite coverage for companies with a greater than 1.0 Mod. In other words, you may have to change carriers to a possibly more expensive choice.
- Governmental entities and some private companies will not use subcontractors with a Mod of 1.0 or greater. Some have dropped this to .9 in certain markets. This is a way to lose a large chunk of business very quickly. I have one on my desk with this situation as I write this article.
- Mods are trend-based which means your Mod has some factor that will likely be tabbed your Mod for at least the next two years. Rarely does a Mod spike for just one year. The time to act is now when the Mod increases to over 1.0 .
- The obvious budget buster is your company or organization will pay more for your coverage than your safer competitors. The Mod is a direct multiplier. Look at your last policy and premium audit from last year.
- Your company may have to move funds away from other areas and increase your safety and risk management program budget to turn the tide. Presenting this budget shift to a Board or C-level managers can be a tough sell.
There are actually more than five. These are the ones that we have seen recently when being called in to assist clients with their Mod.
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