One of the most confusing components of Work Comp is the Experience Modification Factor. If you are like most employers, you watch your mod increase and decrease from year to year and wish you could somehow control it. What is often missing is an understanding of how the Experience Mod factor works and what you can do to manage it to the absolute minimum.
Employers intuitively suspect that if they have injuries, their Experience Mod will go up and if they reduce or eliminate injuries they will go down. At a basic level, their intuition is correct, but there is much more to know and do to actually control Work Comp costs.
Employers Pay For Their Employees' Injuries
Ultimately, in almost all instances, employers pay for their employees’ injuries. In many cases, employers will pay back more than the cost of the injuries because of the impact of the Experience Mod. In effect, because of the use of the Experience Mod, employers are simply financing their injuries, not insuring them. Your perceptions of Work Comp change when you grasp this analysis. When an employer recognizes clearly and quantifiably that they themselves ultimately pay for employee injuries and the insurance company is just financing them. As a result, driving down injury costs makes the employer more profitable and competitive.
In order to reduce costs, employers must move beyond the bidding process and the basic commodity transaction of placing insurance. They need and should demand assistance with the implementation of practical and proven methods for reducing your Experience Modification Factor.
The most obvious but often over-hyped solution is the prevention of injuries through a focus on safety programs. Certainly, a safe workplace and safe work practices are essential to reducing injuries, but safety programs are not the only factor in driving down injuries and their related costs.
Employers must also address these areas:
- Effective hiring practices and employee relationships
- Modified Duty and Return to Work Programs
- Medical Clinic relationships
- Supervisor Training
The key is changing your perception of Workers’ Compensation and then taking the steps that can make a dramatic difference. Give our office a call if you need help putting together your work comp program. Control your ex mod before it controls you!
See more about our Work Comp Solutions Program by clicking here.