Reduce Your Workers’ Compensation Premium
Experience Modification Rate
The best way to lower your ex mod is to reduce the costs of your losses, both frequency, and severity. Using best practices, such as effective return-to-work strategies, will lower ultimately lower the ex-mod and reduce the premium.
Here are several additional strategies that can help lower your ex mod.
1. Experience Rating Adjustment (ERA): Many states have a rule that allows a 70 percent discount on what is reported as ‘actual incurred losses’ for medical only claims.
Example: For a medical-only claim that costs $10,000, just $3,000 would be reported as ‘actual incurred losses.’
Claim total = $10,000 – 70% reduction – ($7,000) = $3,000
The ERA rule was devised by rating bureaus as a way to encourage reporting of smaller claims. It’s important to note that this only applies to medical only claims. Check with your state rating bureau or insurance broker to see if this rule applies in your state.
2. Net Deductible: About 15 states allow companies to exclude from the ‘actual incurred losses’ any amount paid on a claim that is below the deductible amount, whatever it is. If the deductible is $5,000 and a claim costs $6,000, only $1,000 would be included.
3. Injury Triage: Many injuries can be handled with self-care. There is no reason for minor cuts or bruises to become full-fledged claims. Using telephonic nurse triage can help separate insignificant injuries from those that require medical attention, meaning many can be kept off the books and not included in ‘actual incurred losses.’
4. Unit Stat Date: The unit statistical date is the date your total incurred losses are reported to the state rating bureau for the calculation of your next period’s experience rating. Included in total incurred losses is BOTH what has been paid AND outstanding reserves for open claims. Overinflated outstanding reserves can make a significant difference in your total incurred losses.