I recently attended a presentation entitled “Understanding and Controlling your Ex Mod”. (No, it wasn’t a self-help session on handling your “ex” 😉 The talk was actually a rather technical presentation on Workers Compensation, Experience Rating Plans and Strategies to Impact your X-Mod.
Liza Moran VP of Pinnacle Brokers Insurance Solutions was the speaker and to make sure we were all on the same page, she patiently explained what an “Experience Modification” (X-MOD) is all about. (In a nutshell, the idea is related to a merit rating system that provides employers a direct financial incentive to reduce work-related accidents. The higher your x-mod, the higher your cost.)
So, the short answer to the question of how to save money on Workers Comp is: Keep your “Experience Modification” (your X-MOD) under control. Make it better than average by keeping it below 100% (the average). OK. But how does one do that? These were some of her points:
- Watch your unit statistics. Watch your mid-year numbers that can impact your x-mod and future costs. Keep your frequency rate low. Frequency trumps Severity. Frequency has a greater NEGATIVE impact on your Experience Modification.
- Hold regular “claims reviews’ with your carrier and broker. Strategize with your broker and WC carrier. Draw on their expertise to help you reduce your cost. Avail of any free resources that they provide.
- In your organization, create a positive work environment that is NOT litigious. Create an environment of trust and care – one that won’t suggest “go get an attorney!”
Perhaps it helps to understand WHY injured workers resort to obtaining an attorney’s services. A Workers’ Compensation Research Institute (WCRI) Study shows that injured workers tend to turn to a lawyer when:
- They believe that they will be fired if they report an injury
- They believe their supervisor did not think their injury was legitimate
- During the claims process, they experience delay of treatment, or are denied care, or there is poor communication on what is going on
Proactive steps to take to make the work environment less litigious
Develop a company culture that fosters TRUST and where management clearly shows that it values the well-being of its employees. Be proactive in promoting safety practices and communicating procedures when handling injuries. Set up your processes so that the injured is NOT likely to obtain an attorney. In other words, keep your employment relationship in a positive light, stay on top of Worker’s Comp cases and make sure the process is clear and well-understood by supervisors and employees. Having a company culture that cares — goes a long way. It not only reduces cost; it also improves morale, which in turn improves productivity.
In my next blog, I will go into more detail on Liza’s specific suggestions: “Six Practical Tips to reduce Workers Compensation Costs”
See part 2