Answer:
Answer by Scott Simmonds: I'll try to keep this short…
Most companies with workers' compensation premiums over $5,000 have, as part of their premium, an experience modification. The "Mod" is a ratio of your expected losses (based on industry standards) to your actual losses.
A mod of 1.0 indicates that you are at industry average for workers' compensation claims. A mod of less than one (.95 for example) indicates experience that is better (lower losses) than industry average. Conversely, a mod of that is greater than 1.0 indicates greater losses than average.
As the modification is multiplied by your premium to determine your final cost it can have a dramatic impact on premiums. A mod of 1.15 increases the premium a company pays by 15%. The actual calculation of the experience modification is a fairly complex mathematical formula with more than 100 variables. Errors in modifications are not uncommon. The accuracy of the data should be checked.
Calculations are based on the classifications on the workers' compensation policy (usually "Clerical" for banks), the payrolls and the losses of the organization.
An increasing mod indicates that your losses are, relative to other organizations your size, increasing. A mod going from .80 to .85, while an increase, means less than a mod going from 1.00 to 1.05 -- In the first case think of it as going from "great" to "very good". The latter is going from "OK" to "Mediocre".
If you need additional info contact me direct.
Answer:
Answer by Gayla Sherry
One additional suggestion I have is to evaluate the nature of your losses. Even though this evaluation will not help reduce your current rates, it may help in preventing additional losses and prevent future increases based on increased losses.
I've worked with several organizations who have employed this strategy to evaluate the source of the injury, and they have taken proactive steps toward preventing similar injuries. For instance, if you determine that you are having back injuries among tellers, you may trace the source of the injury to improper lifting techiniques when the teller is lifting coin and currency. If this is the case, you may want to do some safety training regarding proper lifting techniques.
Feel free to contact me directly if you'd like additional ideas.
First published on BankersOnline.com 3/11/02
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