AHHC's Blog

Are you 100% sure that your workers comp experience mod is being calculated correctly?  Surprisingly, we find that almost 75% employers have an experience mod that is incorrect or mismanaged in some way.  This can often cause unnecessary overcharges that the employers are not even aware of.

The experience mod is a complicated formula that compares your payroll and claim history to your peers in order to help the insurance companies predict the likelihood of future claims and charge accordingly.  1.00 is average and your number can go up or down from there.  No matter what insurance company you choose to use, they multiply their premium by that number.

For example, if “company A” has a relatively clear claim history, they might qualify for a .80 mod and get a 20% discount.  “Company B” however, might have had a few claims and qualify for a 1.20 resulting in a 20% debit.  If the two companies have the exact same payroll exposure and same insurance provider, “company B” will be paying about 50% more premium than “company A”.

There is so much data that goes into this equation and so many people involved in the process that it’s rare for it to go through without some kind of mistake.  Employers cannot be expected to completely understand this process and they too often just assume that it is done correctly.  Unfortunately, most of the insurance industry does not have the training to help them proactively manage this valuable tool.

As a member of AHHC of NC, you have complementary access to our Risk Management Program website including help managing your experience modifier and many other tools.  For help implementing this into your business and improving your insurance outcomes, contact Jarred Chappell at 1-877-834-4467 x228 or email at jchappell@business-insurers.com.

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