Controlling Workers’ Comp Costs Doesn’t Need to be Complicated
The key to controlling your workers’ compensation costs is understanding your experience modification factor. Your “mod factor” is an adjustment to your workers’ compensation premium that’s based on your company’s actual losses compared to the expected losses for your industry.
Get to Know Your Mod Factor
The mod factor represents either a credit or a debit that is applied to your workers’ compensation premium. A mod factor greater than 1.0 is a debit mod, which means that your losses are worse than expected and a surcharge will be added to your premium. A mod factor less than 1.0 is a credit mod, which means losses are better than expected, resulting in a discounted premium.
If your mod factor is over 1.0, show management how controlling costs can save you money on your insurance premium when it falls below the 1.0 threshold.
The Power is in Your Hands
You may not know it, but you do have control over your mod factor—and your workers’ compensation premium.
Your mod is calculated based on data reported to the rating bureau by past insurers. Incorrect or incomplete data can cause inaccurate mod factors. Review your loss and payroll data to ensure that your calculation is complete and accurate.
You can also control your mod factor by encouraging everyone to focus on safety— especially management and anyone else who is involved in controlling costs. Everyone working safely means fewer accidents to report to your insurance carrier and a lower mod factor.
Return to Work Programs
Another way to control your costs is to establish a return to work program and give modified or light duties to injured workers who can return to work.
Finding modified or light-duty tasks may seem inconvenient, but this is an important way to reduce your workers’ compensation costs—because you pay for fewer days away from work. Plus, this allows you to keep regular contact with employees, so you can see how their recovery is progressing. The most successful return to work programs can accommodate almost any restrictions.
Workplace Policies Can Also Help Control Costs
Your workplace policies should encourage safe working habits and prompt reporting of injuries and accidents. Many companies have accident reporting policies in place but do not bother to implement them, which is dangerous because employees’ injuries could go untreated and hazardous situations will not be improved.
When you receive a claim for an on-the-job accident or injury, report it to your workers’ compensation provider as soon as possible. After an accident or injury, investigate the event right away. Prompt investigation helps you preserve evidence and can deter employees from making fraudulent claims in the future.
We’re a Workers’ Compensation Leader—and We’re Here to Help
If you want to learn more about how your mod impacts your premiums, talk with the workers’ compensation experts at VTC Insurance Group. We have the knowledge and resources you need to help keep your costs in check. Give us a call at 248.828.3377 or visit vtcins.com.
This blog is for informational purposes only and is not intended as legal advice.