Safety and EMods – Highlights From My Presentation From Today

October 10, 2012 By JL Risk Management Consultants

Presentation Highlights – Safety and EMods Are Very Related

How Safety and EMods intermingle was the basis for most of the highlights from my presentation. The NC Mid State Safety Council was kind enough to ask me to do a presentation on how safety programs impact an employer’s bottom line from a Workers Comp standpoint. I am the Treasurer for the organization.

The highlights from my presentation were (you may want to print this one):

Safety Departments can be easily scored by their E-Mods. It is the same as a personal credit score but much harder to improve quickly.
Self Insureds do have an EMod, better known as an LDF (Loss Development Factor). If your company is self insured and does not have an LDF, you are operating a blind WC budget
Due to the economy, there are now temporary employment agencies that may not have their WC policy in force. In this case, the employer will often get stuck with the bill if a temporary employee is injured on the job.
Subcontractors that are operating without a valid insurance policy or with an expired policy actually become employees as the Workers Comp courts are going to go up the Ladder of Insurance (c) to make sure the injured employee will receive WC benefits
Calling the carrier (not the agent) that is listed on the WC certificate of insurance is a good idea just to make sure there is coverage in place for temporary agencies and subcontractors
Do not use your company’s Workers Comp funds to pursue a fraud prosecution.
Workers Comp supplements paid to an injured employee will only make them much more resistant to return to
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The Four Ways To Cut Work Comp Costs from a claims standpoint are:
- Filing First Report of Injury to carrier immediately
- Medical treatment network in place
- Return to Work program in place
- Treat the injured employee as if they are still on the job as they are still your employee
North Carolina Scheduled Rating Plan – discounts are available if a great safety program is in place and your carrier understands your company’s safety measures
An example of how not having a medical network in place = $1.1 million dollar claim
The new NCCI split points can be a benefit or a curse to a safety program
- High EMod companies are going to take a hit
- Lower Emod companies will experience a benefit
- Safety programs and professionals will be worth their weight in gold for the next few years
Bottom Line – Safety is going to be heavily judged by their WC E-Mod even though the safety department may not be involved in some of the WC decisions

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What Is An Experience Modification Factor in Workers Compensation?

April 28, 2010 By JL Risk Management Consultants

Experience Modification Factor E-ModCan Be Debit, Credit or Neutral

There has been much discussion in the last week on the Experience Modification Factor (E-Mod or X-Mods). My definition is your company’s Workers Comp credit score.

Vector Graphic Of Employees Experience Modification Factor Presentation

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From NCCI – Experience modifier (mod) is a multiplier applied to the premium of a qualifying policy and provides an incentive for loss prevention. The mod represents either a credit or debit that is applied to the premium before discounts. If your company’s loss experience is more costly on the average than other company’s loss experience in your industry, the result is a debit mod, or surcharge, on premiums. If your company’s experience is less costly than the industry average, you will receive a credit mod, or discount, on your premium. The acronyms are Mod, E-Mod, or Emod.

If your Mod is equal to 1.0, you have a neutral Mod. A neutral Mod means that you receive no credit or debit from the Mod part of your calculation. Your company has the average Experience Mod for your industry judged from your associated Classification Codes. The rating bureaus such as NCCI, WCIRB, or an independent rating bureau publishes and often updates the class codes in your company’s states of operation.

From CA’s WCIRB – which are expressed as a percentage, compare the loss or claims history of one company to all other companies in the same industry. Generally, an experience modification factor of less than 100% reflects a better-than-average experience, while the same number that exceeds 100% reflects a worse-than-average experience. Accordingly, an experience modification factor that is greater than 100% usually increases the cost of your workers’ compensation premiums, while an experience modification that is less than 100% usually decreases the cost of your workers’ compensation premiums. The acronym is X-Mod or Xmod.

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Your E-Mod Is 10 Times More Difficult to Correct Than Your Credit Score

June 16, 2008 By JL Risk Management Consultants

Correction To Your E-Mod Can Be Difficult and Delayed

Vector illustration of Your E-Mod of liquid correction

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Your E-Mod can be corrected. The deck is stacked against you when you want to correct your company’s Workers Compensation Experience Mod.

The reasons:

You can correct what has happened with your credit experience far into the past. You cannot, and this is an important point, correct your Workers Comp reserves except for the current year. No insurance carrier will allow a correction of the reserves into prior policy periods.
If you decide to correct your credit score, what you do today counts for today. In Workers Compensation, your current efforts will not show up for approximately three years. Patience is an important virtue with Workers Comp.
You have a credit bureau that will assist you if you have a problem, even if the creditor is not cooperating. You must deal with your carrier to report the proper information to your State Rating Bureau or NCCI. Do not expect your State Rating Bureau or the NCCI to correct your information. They will only report what the insurance carrier reports.
Due to federal regulations, your credit report is easier to read than in the past. Your Experience Mod rating sheets can be very confusing when trying to decipher them. 2018 update – The WCIRB California Rating Bureau has allegedly simplified the Experience Rating Sheets. Check out their new simplified EMR rating sheets.
2018 Update – there have been a few times where the reserves on prior loss runs or policies were adjusted by the carrier and reported to the rating bureau with corrections. Many of them involved some type of litigation status.

There are others, but these are the major concerns/complaints that we receive from employers. I may add in more examples over the next few days.

Next Up – The Top 10 Questions We Receive

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You Have Another Business Credit Score That Needs Your Attention II

June 15, 2008 By JL Risk Management Consultants

Business Credit Score Part II

What is The Secret Business Credit Score?
It is your Experience Modification Factor (E-Mod, Mod, X-Mod, etc). During all of my Workers Comp presentations, I point this out. If it is a longer presentation, I usually go through how E-Mods are calculated.

Picture of man hand doing Credit Score on computer

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If you think about it, even your personal credit has a score. I usually equate a score of 692 with an E-Mod of 1.0. That means you are average, or you have had an average amount of Workers Comp claim results compared to others in your industry if your company has been classified properly with the correct classification codes.

Anything below a 1.0 is the same as having a credit score of above 692. That means a score of 750 is similar to an E-Mod of .70. If you have an E-Mod that low, you will have more insurance carriers bidding for your business, just as you would have more banks interested in you with a credit score of 750. Your company will pay lower Workers Comp premiums just as you would pay lower credit terms on a loan.

Money Graph Credit Score And Calculator Icon

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An E-Mod of 1.0 though, if compared to your grades in school, would be a “C“. Is a C acceptable to you? How do you get to an “A“?

Does that all sound easy and direct? Well, it is just not that easy.

Check with me on the next post and I will tell you how Workers Comp E-Mods are 10 times more difficult to improve or have errors corrected than with your D&B report or your personal credit score.

By the way, if you are reading this post, you have taken the first step to improving what you pay for Workers Comp services including your Workers Comp Credit Score better known as an Experience Modification Factor.